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Must Sell |
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| Authors: | Luías Cabral József Sákovics |
| Institution: | Faculdade de Economia Universidade Nova de Lisbon and CEPR 1000 Lisbon, Portugal;Institut d'Anàlisi Econòmics, CSIC Campus UAB 08193 Bellaterra (Barcelona), Spain |
| Abstract: | Why are moving sales a successful and widespread phenomenon? How can it be optimal for a seller to disclose her low valuation for the item to be sold? We propose an explanation based on the “lemons problem” in bargaining with asymmetric information about quality. Disclosing a low valuation signals that there are significant gains from trade, so that trade takes place when it wouldn't otherwise, and all agents are made better off. |
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