Speaker: Prof Albert Ma
Affiliation: Boston University
Location: Room S402, Social Sciences Building (#24), UQ St Lucia Campus.
Abstract
We study credence goods in a general model. A consumer may suffer a loss which is a continuous random variable. Privately observing the loss value, an expert can provide a repair at a price to eliminate the consumers loss. All perfect-Bayesian equilibria are inefficient, in that some losses are not repaired. In closed form, we derive a pooling equilibrium (where losses are inferred to be in an interval), and a separating equilibrium (where losses are precisely inferred). If the expert can acquire an information structure on losses, the first best is achieved by a binary signal. Results are robust when cost and loss are random and correlated, and when there are multiple experts.
About the presenter's meeting
If you would like to meet with Prof Ma, contact A/Prof Gerlach
About School Seminar Series
The School of Economics General Seminar Series is held on Fridays. These are in-person and presented by a range of guest researchers from around Australia and internationally.