Information Disclosure as a Matching Mechanism: Theory and Evidence from a Field Experiment
American Economic Review
vol. 105,
no. 2, February 2015
(pp. 886-905)
Abstract
Market outcomes depend on the quality of information available to its participants. We measure the effect of information disclosure on market outcomes using a large-scale field experiment that randomly discloses quality information in wholesale automobile auctions. We argue that buyers in this market are horizontally differentiated across cars that are vertically ranked by quality. This implies that information disclosure helps match heterogeneous buyers to cars of varying quality, causing both good and bad news to increase competition and revenues. The data confirm these hypotheses. These findings have implications for the design of other markets, including e-commerce, procurement auctions, and labor markets. (JEL C93, D44, D82, L15)Citation
Tadelis, Steven, and Florian Zettelmeyer. 2015. "Information Disclosure as a Matching Mechanism: Theory and Evidence from a Field Experiment." American Economic Review, 105 (2): 886-905. DOI: 10.1257/aer.20110753Additional Materials
JEL Classification
- C93 Field Experiments
- D44 Auctions
- D82 Asymmetric and Private Information; Mechanism Design
- L15 Information and Product Quality; Standardization and Compatibility