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Author: Stefan Penczynski Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
This study investigates experimentally the disclosure of verifiable information in settings with and without seller competition. Sellers often choose to report a selected set of information and buyers account for this - even though not fully - by bidding skeptically. As expected, competition increases sellers' information disclosure but leads, surprisingly and replicably, to more buyer naivety, which offsets the welfare benefits from improved disclosure. We can rule out a number of plausible explanations and find that a framing effect generates this result: merely describing a situation as competitive rather than monopolistic changes buyers' approach to the situation fundamentally. Akin to the so-called Peltzman effect, buyers seemingly perceive competition as a safer environment to which they behaviorally adapt by abandoning their skepticism. In comparison, faced with the sellers' option to unobservedly purchase additional information, buyers react - as expected - by increasing their skepticism.
Author: Stefan Penczynski Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
This study investigates experimentally the disclosure of verifiable information in settings with and without seller competition. Sellers often choose to report a selected set of information and buyers account for this - even though not fully - by bidding skeptically. As expected, competition increases sellers' information disclosure but leads, surprisingly and replicably, to more buyer naivety, which offsets the welfare benefits from improved disclosure. We can rule out a number of plausible explanations and find that a framing effect generates this result: merely describing a situation as competitive rather than monopolistic changes buyers' approach to the situation fundamentally. Akin to the so-called Peltzman effect, buyers seemingly perceive competition as a safer environment to which they behaviorally adapt by abandoning their skepticism. In comparison, faced with the sellers' option to unobservedly purchase additional information, buyers react - as expected - by increasing their skepticism.
Author: Jesal Sheth Publisher: ISBN: Category : Languages : en Pages :
Book Description
The theory of voluntary disclosure of information posits that market forces lead senders to disclose information through a process of unravelling. This prediction requires that receivers hold correct beliefs and, in equilibrium, make adverse inferences about non-disclosed information. Previous research finds that receivers do not sufficiently infer non-disclosure as bad news, leading to the failure of complete unravelling. This paper experimentally examines whether competition between senders when receivers strongly prefer disclosed over nondisclosed information increases unravelling. We further examine whether receivers' naivety about non-disclosed information decreases with competition between senders. We find that complete unravelling fails to occur without competition. However, with competition, there is significantly higher unravelling such that it increases receivers' overall welfare. Interestingly, receivers' welfare increases despite no significant difference in their guesses or beliefs about non-disclosed information relative to the treatment without competition. We conclude that competition between senders positively affects disclosure of information and receivers' welfare.
Author: Jeremy Bertomeu Publisher: ISBN: Category : Languages : en Pages : 41
Book Description
We develop a unified treatment of a broad class of truthful disclosure games. Such games have, at most, one equilibrium that is reasonable given a commonly used signaling refinement. We provide a simple algorithm to construct the unique equilibrium strategy and beliefs, and identify necessary and sufficient conditions for existence. This approach applies to multidimensional verifiable disclosure games with arbitrary costs or information endowments. We prove the following conjecture: a disclosure regulation that commits the sender to providing more precise information reduces welfare in a competitive market. We also perform comparative statics with respect to frictions that prevent unraveling and show, in an application, that the reasonable equilibrium involves sanitation.
Author: Nicholas L. Georgakopoulos Publisher: Cambridge University Press ISBN: 1108146171 Category : Law Languages : en Pages : 215
Book Description
This book opens with a simple introduction to financial markets, attempting to understand the action and the players of Wall Street by comparing them to the action and the players of main street. Firstly, it explores the definition of a security by its function, the departure from the buyer beware environment of corporate law and the entrance into the seller disclose environment of securities law. Secondly, it shows that the cost of disclosure rules is justified by their capacity to combat irrationalities, fads, and panics. The third section explains how the structure of class actions is designed to improve deterrence. Next it explores the economic harm from insider trading and how the law fights it. In sum, the book shows how all these parts of securities law serve the virtuous cycle from liquidity to accurate prices and more trading and how the great recession showed that our securities regulation reacted mostly adequately to the crisis.
Author: Oliver J. Board Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
There are many laws which require sellers to disclose private information about the quality of their products. But the theoretical justification for these laws is not obvious: economic theory predicts that a seller will voluntarily disclose such quality information, however unfavorable, as long as it is costless to do so. Here we show that competitive pressures between firms may undermine this full disclosure result, and explain why only high quality firms choose to disclose. In this setting, mandatory disclosure laws can promote competition and raise consumer surplus at the expense of firm profits, potentially increasing the efficiency of the market.
Author: Qiang Gong Publisher: ISBN: Category : Languages : en Pages :
Book Description
In the first essay, we analyze how the strategic interaction of firms will affect a firm's decision in disclosing verifiable information. In our model, a firm that is privately informed of market demand will compete with an uninformed rival. When it is common knowledge that the firm is informed and the verifiable disclosure requires no cost, there exists an equilibrium in which the informed firm will fully disclose its information. However, when there is uncertainty about whether the informed firm has received the information or not, then the firm's equilibrium ex-post disclosure strategy will depend on the subsequent competition. We consider quantity-competition with three different timings: the informed firm is a Stackleberg leader; the informed firm is a Stackleberg follower; and the two firms choose quantity output simultaneously (Cournot). We show when the informed firm is a leader, the information will be fully revealed for strategic reasons. When the informed firm is a follower or the two firms make quantity decisions simultaneously, in order to maximize its profit, the informed firm will disclose bad news and withhold the good news to make its competitor less aggressive. In the second essay, we analyze the optimal buy-back contracts for a supplier selling to a retailer when demand is uncertain and when the retailer can take a costly hidden action to forecast demand more accurately. The supplier chooses the wholesale and buy back price to maximize his profits given that the retailer's inventory order level and private information acquisition decisions are both chosen to maximize the retailer's profits. In contrast to the standard buy-back contract model in which the first best of the system can always be implemented, our model suggests that the supplier pays not only the cost of acquiring information, but also the information rent to induce the retailer to invest in acquiring information. In this case, the first best of the system cannot be always implemented. Our model can explain the empirical results that the Vendor Managed Inventory systems are prevalent while the retailer is better informed than the supplier, which cannot be well explained by the standard buy-back contract model.
Author: Publisher: Springer ISBN: 1349588024 Category : Law Languages : en Pages : 7493
Book Description
The award-winning The New Palgrave Dictionary of Economics, 2nd edition is now available as a dynamic online resource. Consisting of over 1,900 articles written by leading figures in the field including Nobel prize winners, this is the definitive scholarly reference work for a new generation of economists. Regularly updated! This product is a subscription based product.
Author: Joseph E. Harrington, Jr. Publisher: MIT Press ISBN: 0262036932 Category : Business & Economics Languages : en Pages : 145
Book Description
A review of the theoretical research on unlawful collusion, focusing on the impact and optimal design of competition law and enforcement. Collusion occurs when firms in a market coordinate their behavior for the purpose of producing a supracompetitive outcome. The literature on the theory of collusion is deep and broad but most of that work does not take account of the possible illegality of collusion. Recently, there has been a growing body of research that explicitly focuses on collusion that runs afoul of competition law and thereby makes firms potentially liable for penalties. This book, by an expert on the subject, reviews the theoretical research on unlawful collusion, with a focus on two issues: the impact of competition law and enforcement on whether, how long, and how much firms collude; and the optimal design of competition law and enforcement. The book begins by discussing general issues that arise when models of collusion take into account competition law and enforcement. It goes on to consider game-theoretic models that encompass the probability of detection and penalties incurred when convicted, and examines how these policy instruments affect the frequency of cartels, cartel duration, cartel participation, and collusive prices. The book then considers the design of competition law and enforcement, examining such topics as the formula for penalties and leniency programs. The book concludes with suggested future lines of inquiry into illegal collusion.
Author: Stefan Penczynski
Author: Stefan Penczynski
Author: Jesal Sheth
Author: Jeremy Bertomeu
Author: Lucy F. Ackert
Author: Nicholas L. Georgakopoulos
Author: Oliver J. Board
Author: Qiang Gong
Author: 
Author: Joseph E. Harrington, Jr.
Author: