Search frictions can explain why the “law of one price" fails in retail markets and why even firms selling commodity products have pricing power. In online commerce, physical search costs are low, yet price dispersion is common. We use browsing data from eBay to estimate a model of consumer search and price competition when retailers offer homogeneous goods. We find that retail margins are on the order of 10%, and use the model to analyze the design of search rankings. Our model explains most of the effects of a major re-design of eBay’s product search, and allows us to identify conditions where narrowing consumer choice sets can be pro-competitive. Finally, we examine a subsequent A/B experiment run by eBay that illustrates the greater difficulties in designing search algorithms for differentiated products, where price is only one of the relevant product attributes.
|JEL:||D12 D22 D83 L13 L86|
|By:||Jesse Shore (Boston University – Department of Information Systems)
Ethan Bernstein (Harvard Business School, Organizational Behavior Unit)
David Lazer (Harvard University – Harvard Kennedy School (HKS))
Using data from a novel laboratory experiment on complex problem solving in which we varied the network structure of 16-person organizations, we investigate how an organization’s network structure shapes performance in problem-solving tasks. Problem solving, we argue, involves both search for information and search for solutions. Our results show that the effect of network structure is opposite for these two important and complementary forms of search. Dense clustering encourages members of a network to generate more diverse information, but discourages them from generating diverse theories: in the language of March (1991), clustering promotes exploration in information space, but decreases exploration in solution space. Previous research, generally focusing on only one of those two spaces at a time, has produced inconsistent conclusions about the value of network clustering. By adopting an experimental platform on which information was measured separately from solutions, we were able to reconcile past contradictions and clarify the effects of network clustering on problem-solving performance. The finding both provides a sharper tool for structuring organizations for knowledge work and reveals the challenges inherent in manipulating network structure to enhance performance, as the communication structure that helps one antecedent of successful problem solving may harm the other.
|Keywords:||networks, experiments, clustering, problem solving, exploration and exploitation, knowledge, information, communication, search|
|By:||Aurora García-Gallego (LEE & Department of Economics, Universitat Jaume I, Castellón, Spain)
Nikolaos Georgantzis (GLOBE & Economics Department, University of Granada, Spain)
Ainhoa Jaramillo-Gutiérrez (EriCes & Dpt. of Applied Economics, University of Valencia, Spain)
Pedro Pereira (Autoridade da Concorrência and CEFAGE-UE, U. of Evora, Portugal)
J. Carlos Pernías-Cerrillo (Economics Department, Universitat Jaume I, Castellón, Spain)
We study the evolution of prices in markets assisted by price-comparison engines. We use laboratory data obtained under two industry sizes and two conditions concerning the sample (complete, incomplete) of prices available to informed consumers. Distributions are typically bimodal. One of the two modes, corresponding to monopoly prices, tends to increasingly attract prices over time. The second one, corresponding to interior prices, presents a decreasing trend. Monopoly pricing can be used as an insurance against more competitive (but riskier) behavior. In fact, subjects earning low profits due to interior pricing in the past are more likely to choose monopoly pricing.
|Keywords:||Internet Economics, price-comparison search engines, mixed strategy equilibria, experimental economics|
George Loewenstein & Daylian M. Cain & Sunita Sah, (2011) “The Limits of Transparency: Pitfalls and Potential of Disclosing Conflicts of Interest,"
American Economic Review, vol. 101(3), pages 423-28, May. [link to AER]
Noted by Yi-Nung
這篇提及到 Can and Moore (2005, 2011) 的實驗, 有關利益衝突與揭露 (disclosure of conflicts);
centipede game (揭露/未揭露 first mover 的 payoff)
理專/Broker 揭露/未揭露 commission
Ultimatum game 改成 部份捐款給慈善機構 (或 as a public good), 是否會緩和 fairness 的要求
主要結論: more information, in general, is not very effective in improving decisions…. that disclosure does not replace more effective measures, such as working harder to eliminate conflicts of interest in the first place.
p.424: … the introduction of a subsidy or fine can undermine nonmaterial motives, disclosing a conflict of interest can likewise undermine the advisor’s motivation to adhere to professional standards. … Experimental research suggests that … people feel “licensed" to act immorally in subsequent interactions. Disclosure also introduces a possible rationalization for unethical behavior…"expect" bias.
research on judgment suggests that advisees are likely to “anchor" on the advice they receive and then adjust insufficiently, even though they know the advice may be biased (Tversky and Kahnemen, 1974) (先說先嬴…)
…disclosure can lead to an increase rather than a decrease in trust if the disclosure is interpreted as a sign of honesty or if the fact that the advisor is receiving payments is interpreted as in indication of professional standing.
(p.242) In the absence of disclosure,…, a patient’s rejection of participation in a drug trial would likely be attributed to risk aversion… The same rejection,… might be attributed to the patient’s distrust of the doctor
We review evidence from our published and ongoing research that disclosing conflicts of interest has unintended consequences, helping conflicted advisors and harming their advisees: With disclosure, advisors feel comfortable giving more biased advice, but advisees do not properly adjust for this and generally fail to sufficiently discount biased advice. Disclosure also increases pressure on advisees to comply with advice; following disclosure, advisees feel more uncomfortable in turning down advice (e.g., it signals distrust of the advisor’s motives). Finally, we examine the effectiveness of policy interventions aimed at reducing these unintended consequences and discuss how to realize potential benefits of disclosure.