The Market for Evaluations
- (pp. 564-584)
Abstract
Recent developments in computer networks have driven the cost of distributing information virtually to zero, creating extraordinary opportunities for sharing product evaluations. The authors present pricing and subsidy mechanisms that operate through a computerized market and induce the efficient provision of evaluations. The mechanisms overcome three major challenges: first, evaluations, which are public goods, are likely to be underprovided; second, an inefficient ordering of evaluators may arise; and third, the optimal quantity of evaluations depends on what is learned from the initial evaluations.Citation
Avery, Christopher, Paul Resnick, and Richard Zeckhauser. 1999. "The Market for Evaluations." American Economic Review, 89 (3): 564-584. DOI: 10.1257/aer.89.3.564JEL Classification
- L15 Information and Product Quality; Standardization and Compatibility
- D83 Search; Learning; Information and Knowledge; Communication; Belief
- O33 Technological Change: Choices and Consequences; Diffusion Processes