Asymmetric Information, Adverse Selection and Online Disclosure: The Case of eBay Motors

By Gregory Lewis. 2011

288 citations recorded by the source corpus.

Since Akerlof (1970), economists have understood the adverse selection problem that information asymmetries can create in used goods markets. The remarkable growth in online used goods auctions thus poses a puzzle. Part of the solution is that sellers voluntarily disclose their private information on the auction web page. This defines a precise contract -- to deliver the car shown for the closing price -- which helps protect the buyer from adverse selection. I test this theory using data from eBay Motors, finding that online disclosures are important price determinants, and that disclosure costs impact both the level of disclosure and prices. (JEL D44, D82, L81)

Subfields: Management Science and Operations Research, Marketing, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/2dfb3eb87c8afa932d2a40819799fc53b498debd

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Management Science and Operations Research

1. Neel Sundaresan
2. Anurag Bhardwaj
3. Robinson Piramuthu
4. Wei Di

In Marketing

1. Neel Sundaresan
2. Anurag Bhardwaj
3. Robinson Piramuthu
4. Wei Di

In Strategy and Management

1. Neel Sundaresan
2. Anurag Bhardwaj
3. Robinson Piramuthu
4. Wei Di

Citations in the corpus

• Market Structure, Reputation, and the Value of Quality Certification (2014, unknown): “…of this work has been motivated by the increasing importance of e-commerce and has been enabled by the ever greater ease with which detailed information may be collected from online marketplaces, most notably eBay (see, for example, Lewis 2011; Saeedi 2012; and Elfenbein, Fisman, and McManus 2012).”
• Is a picture really worth a thousand words?: - on the role of images in e-commerce (2014, background): “While Amazon curates and standardizes the images given its catalog-based commerce, on eBay, given the diversity of the products, product conditions, and the sellers, there are huge variations among images in terms of quantity and quality.”
• Some Simple Economics of Crowdfunding (2014, unknown): “Lewis (2011) further examines the role of information access and shows that the voluntary disclosure of private information increases the prices of used cars on eBay.”
• Landing the First Job: The Value of Intermediaries in Online Hiring (2016, unknown): “[25] Lewis, Gregory.”