title   
  

Deception, exploitation and lifespan of buyer-seller relationship in experience goods markets

Warning The system is temporarily closed to updates for reporting purpose.

Özyurt, Selçuk (2017) Deception, exploitation and lifespan of buyer-seller relationship in experience goods markets. [Working Paper / Technical Report] Sabanci University ID:UNSPECIFIED

[img]
Preview
PDF - Requires a PDF viewer such as GSview, Xpdf or Adobe Acrobat Reader
386Kb

Abstract

A market where short-lived customers, i.e., one-time shoppers, interact with a long-lived expert is considered. The expert privately observes whether or not a particular treatment is necessary for his customers and has incentive to recommend the treatment even if it is unnecessary. When the expert is known to be opportunist, i.e., rational in the usual sense, his best equilibrium payoff can be achieved by being honest at all times. However, if the customers believe that the expert is a commitment type who recommends the treatment only when it is necessary, then the expert can build reputation as an honest seller and exploit his customers to achieve higher payoffs. Exploiting customers for a long period of time is extremely unlikely even if the seller's past actions are imperfectly observed. However, this behavior is a part of many equilibria when the expert's customer is also a long-lived agent.

Item Type:Working Paper / Technical Report
Subjects:H Social Sciences > HD Industries. Land use. Labor > HD0041 Competition
H Social Sciences > HB Economic Theory > HB135-147 Mathematical economics. Quantitative methods
ID Code:35234
Deposited By:Selçuk Özyurt
Deposited On:31 Jul 2018 16:36
Last Modified:31 Jul 2018 16:36

Repository Staff Only: item control page