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Information about sellers' past behavior in the market for lemons

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  • Kim, Kyungmin

Abstract

This paper studies the role of time-on-the-market information in dynamic trading environments under adverse selection. I consider a sequential search model in which (informed) sellers receive price offers from (uninformed) buyers and analyze both the case in which buyers receive no information about sellers' trading histories and the case in which buyers observe sellers' time-on-the-market. I analyze how the observability of time-on-the-market influences agents' trading behavior and investigate its welfare implications in both the single-seller environment and the stationary market environment.

Suggested Citation

  • Kim, Kyungmin, 2017. "Information about sellers' past behavior in the market for lemons," Journal of Economic Theory, Elsevier, vol. 169(C), pages 365-399.
    • Handle: RePEc:eee:jetheo:v:169:y:2017:i:c:p:365-399
    DOI: 10.1016/j.jet.2017.02.012
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Eeva Mauring, 2020. "Informational Cycles in Search Markets," American Economic Journal: Microeconomics, American Economic Association, vol. 12(4), pages 170-192, November.
    2. James Albrecht & Bruno Decreuse & Susan Vroman, 2023. "Directed Search With Phantom Vacancies," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 64(2), pages 837-869, May.
    3. Ayca Kaya & Santanu Roy, 2023. "Repeated Trading: Transparency and Market Structure," Departmental Working Papers 2301, Southern Methodist University, Department of Economics.
    4. William Fuchs & Andrzej Skrzypacz, 2019. "Costs and benefits of dynamic trading in a lemons market," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 33, pages 105-127, July.
    5. Hwang, Ilwoo, 2018. "Dynamic trading with developing adverse selection," Journal of Economic Theory, Elsevier, vol. 176(C), pages 761-802.
    6. Kaya, Ayça & Roy, Santanu, 2022. "Market screening with limited records," Games and Economic Behavior, Elsevier, vol. 132(C), pages 106-132.
    7. Vincent Maurin, 2022. "Liquidity Fluctuations in Over‐the‐Counter Markets," Journal of Finance, American Finance Association, vol. 77(2), pages 1325-1369, April.
    8. Lester, Benjamin & Shourideh, Ali & Venkateswaran, Venky & Zetlin-Jones, Ariel, 2023. "Market-making with search and information frictions," Journal of Economic Theory, Elsevier, vol. 212(C).
    9. Peter Wagner, 2023. "Seller experimentation and trade," Review of Economic Design, Springer;Society for Economic Design, vol. 27(2), pages 337-357, June.
    10. Dino Gerardi & Lucas Maestri & Ignacio Monzón, 2022. "Bargaining over a Divisible Good in the Market for Lemons," American Economic Review, American Economic Association, vol. 112(5), pages 1591-1620, May.
    11. Barsanetti, Bruno & Camargo, Braz, 2022. "Signaling in dynamic markets with adverse selection," Journal of Economic Theory, Elsevier, vol. 206(C).

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    More about this item

    Keywords

    Adverse selection; Sequential search; Time-on-the-market;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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