%D 2004
%L discovery14578
%I ESRC Centre for Economic Learning and Social Evolution
%T Learning trust
%A I. Bohnet
%A H. Harmgart
%A S. Huck
%A J.R. Tyran
%K JEL classification: C72, C91, L14
%X We examine the effects of different forms of feedback information on
the performance of markets that suffer from moral hazard problems due
to sequential exchange. As orthodox theory would predict, we find that
providing buyers with information about sellers’ trading history boosts
market performance. More surprisingly, this beneficial effect of incentives
for reputation building is considerably enhanced if sellers, too, can
observe other sellers’ trading history. This suggests that two-sided market
transparency is an important ingredient for the design of well-functioning
markets that are prone to moral hazard.
%N 100
%S ELSE Working Papers
%C London, UK