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In this paper we conduct laboratory experiments to test the theory of strategic information transmission. Our experimental results strongly support the basic insight of the theory, namely, that less information is transmitted when preferences of the sender and the receiver diverge. Moreover, the average payoffs for the senders, the receivers, and the(More)
There are two fundamentally different views of the role of elections in policy formation. In one view, voters can affect candidates' policy choices: competition for votes induces politicians to move toward the center. In this view, elections have the effect of bringing about some degree of policy compromise. In the alternative view, voters merely elect(More)
  • V Joseph Hotz, Mo Xiao, Dan Ackerberg, Alberto Bernardo, Hongbin Cai, Harold Demsetz +8 others
  • 2010
We examine the incentives for firms to voluntarily disclose otherwise private information about the quality attributes of their products. In particular, we focus on the case of differentiated products with multiple attributes and heterogeneous consumers. We show that there exist certain configurations of consumers' multi-dimensional preferences under which(More)
  • Mo Xiao, V Joseph Hotz, John Riley, Dan Ackerberg, Kenneth Sokoloff, Tasneem Chipty +10 others
  • 2010
The ineffectiveness of a quality accreditation mechanism can be attributed to the inability of the accreditation status to provide consumers with information they do not already possess. I present a structural model of demand allowing consumers to infer quality from both accreditation status and firm reputation. I then estimate this model to assess the(More)
Trust is vital for market development, but how can trust be enhanced in a mar-ketplace? A common view is that more trusting may help to build trust, especially in less developed economies. In this paper, we argue that more trusting may lead to less trust. We set up a rational expectation model in which a marketplace uses buyer protection to promote buyer(More)
We study effects of horizontal integration on firm reputation. In an environment where customers observe only imperfect signals about firms' effort/quality choices, firms cannot maintain good reputation and earn quality premium forever. Even when firms choose high quality, there is always a possibility that a bad signal is observed. Thus, firms must give up(More)
Economists have long recognized the importance of trust, but how can trust be enhanced in a marketplace? We set up a rational expectation model that allows the marketplace to target buyer trusting (via a buyer protection program) and seller trustworthiness (via penalty on cheaters) separately. We show that these two policies have opposite effects on the(More)