Logo Logo

Information Disclosure as a Matching Mechanism: Theory and Evidence from a Field Experiment, American Economic Review

Abstract

Market outcomes depend on the quality of information available to its participants. We measure the effect of information disclosure on market outcomes using a large-scale field experiment that randomly discloses quality-information in wholesale automobile auctions. We argue that buyers in this market are horizontally differentiated across cars that are vertically ranked by quality. This implies that information disclosure helps match heterogeneous buyers to cars of varying quality, causing both good and bad news to increase competition and revenues. The data confirm these hypotheses. These findings have implications for the design of other markets, including e-commerce, procurement auctions, and labor markets.

Type

Article

Author(s)

Steve Tadelis, Florian Zettelmeyer

Date Published

2015

Citations

Tadelis, Steve, and Florian Zettelmeyer. 2015. Information Disclosure as a Matching Mechanism: Theory and Evidence from a Field Experiment. American Economic Review. 105(2): 886-905.

KELLOGG INSIGHT

Explore leading research and ideas

Find articles, podcast episodes, and videos that spark ideas in lifelong learners, and inspire those looking to advance in their careers.
learn more

COURSE CATALOG

Review Courses & Schedules

Access information about specific courses and their schedules by viewing the interactive course scheduler tool.
LEARN MORE

DEGREE PROGRAMS

Discover the path to your goals

Whether you choose our Full-Time, Part-Time or Executive MBA program, you’ll enjoy the same unparalleled education, exceptional faculty and distinctive culture.
learn more