What the Seller Won’t Tell You: Persuasion and Disclosure in Markets
Thе paper presents the microeconomic theoretical arguments about how sellers disclose information in an attempt to encourage buyers, and the potential role for regulation in encouraging efficient disclosure of information. The author seeks to understand, when should one expect all the relevant information to be reported. If testing and reporting by the seller are costly, the question is whether too little or too much testing and reporting will be done. The article also studies the types of information withheld by the seller and the corresponding reactions of rational buyers. The problems of social welfare and the government regulations to improve the functioning of markets are also addressed. The theoretical tool proposed by the author is the theory of persuasion games — games in which one or more sellers provide verifiable information to buyers to influence the actions they take.
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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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25044, London School of Economics and Political Science, LSE Library.
- Rubinstein, Ariel & Glazer, Jacob, 2006. "A study in the pragmatics of persuasion: a game theoretical approach," Theoretical Economics, Econometric Society, vol. 1(4), pages 395-410, December.
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- repec:tpr:qjecon:v:90:y:1976:i:4:p:599-617 is not listed on IDEAS
- Joseph Farrell & Matthew Rabin, 1996. "Cheap Talk," Journal of Economic Perspectives, American Economic Association, vol. 10(3), pages 103-118, Summer.
- Verrecchia, Robert E., 1983. "Discretionary disclosure," Journal of Accounting and Economics, Elsevier, vol. 5(1), pages 179-194, April.
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