Event Details

The Economics Department is delighted to host the Economics Seminar Series

Our next external speaker is Stefan Penczynski from the University of East Anglia.

Title: Disclosure of Verifiable Information under Competition: An Experimental Study

Authors: Stefan Penczynski, Christian Koch and Sihong Zhang

Abstract: This study investigates experimentally the disclosure of verifiable information in settings with and without seller competition. Sellers often choose to report a selected set of information and buyers account for this -- even though not fully -- by bidding skeptically. As expected, competition increases sellers' information disclosure but leads, surprisingly and replicably, to more buyer naivety, which offsets the welfare benefits from improved disclosure. We can rule out a number of plausible explanations and find that a framing effect generates this result: merely describing a situation as competitive rather than monopolistic changes buyers' approach to the situation fundamentally. Akin to the so-called Peltzman effect, buyers seemingly perceive competition as a safer environment to which they behaviorally adapt by abandoning their skepticism. In comparison, faced with the sellers' option to unobservedly purchase additional information, buyers react -- as expected -- by increasing their skepticism.

Because of the uncertainties caused by the rail strikes, our next external seminar will be online only.