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Deception and price in a market with asymmetric information
Mälardalen University, Department of Mathematics and Physics.ORCID iD: 0000-0002-7164-0924
Univ S Carolina, USA.
2007 (English)In: Judgment and Decision Making, ISSN 1930-2975, Vol. 2, no 1, 23-28 p.Article in journal (Other (popular science, discussion, etc.)) Published
Abstract [en]

In markets with asymmetric information, only sellers have knowledge about the quality of goods. Sellers may of course make a declaration of the quality, but unless there are sanctions imposed on false declarations or reputations are at stake, such declarations are tantamount to cheap talk. Nonetheless, in an experimental study we find that most people make honest declarations, which is in line with recent findings that lies damaging another party are costly in terms of the liar's utility. Moreover, we find in this experimental market that deceptive sellers offer lower prices than honest sellers, which could possibly be explained by the same wish to limit the damage to the other party. However, when the recipient of the offer is a social tie we find no evidence for lower prices of deceptive offers, which seems to indicate that the rationale for the lower price in deceptive offers to strangers is in fact profit-seeking (by making the deal more attractive) rather than moral.

Place, publisher, year, edition, pages
2007. Vol. 2, no 1, 23-28 p.
National Category
Social Sciences
Identifiers
URN: urn:nbn:se:mdh:diva-2033ISI: 000259229500003OAI: oai:DiVA.org:mdh-2033DiVA: diva2:114696
Available from: 2007-03-09 Created: 2007-03-09 Last updated: 2015-05-19Bibliographically approved

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