Dr. Bart Wilson of Chapman University, with Dr. Artie Zillante at UNC Charlotte, published “More Information, More Ripoffs: Experiments with Public and Private Information in Markets with Asymmetric Information”, as the lead article in the Review of Industrial Organization’s February issue.
Models of markets for used cars predict that sellers can pawn off lemons on trusting buyers. However, in a laboratory experiment Profs. Wilson and Zillante find stark evidence that sellers cannot pawn off lemons on buyers when transaction prices are private. Only when transaction prices are public can owners of lemons successfully masquerade as sellers of high quality goods. Artie is a former IFREE-assisted post doc at GMU.