Cheap talk, fraud, and adverse selection in financial markets: some experimental evidence

We examine communication in laboratory games with asymmetricinformation. Sellers know true asset qualities. Potential buyersonly know the quality distribution. Prohibiting communication,we document the degree of adverse selection. Then we examinetwo alternative communication mechanisms. Under 'cheap talk',each seller can announce any subset of qualities. Under 'antifraud',the subset must include the true quality. Both mechanisms improvemarket efficiency, but very differently. Relying on sellers'frequently exaggerated claims, buyers often overpay under cheaptalk. Efficiency gains come at the buyer's expense. The antifraudrule improves efficiency further and eliminates the wealth transferfrom buyers to sellers.     

Sensory enabling technology acceptance model (SE‐TAM): A multiple‐group structural model comparison

Sensory enabling technology (SET) can deliver product information that is similar to the information obtained from direct product examination, thus reducing product risk. In addition, the interactivity and customer involvement created by sensory enabling technologies can enhance the entertainment value of the online shopping experience. The proposed model examined this dual role of sensory experience enablers in the online soft goods shopping process for three types of sensory enabling technologies that are widely applied in online retail sites. The results provided empirical support for perceived usefulness and perceived entertainment value as strong predictors of consumers' attitudes toward using all three of the sensory enabling technologies tested in this study. The impact of perceived ease of use differed by technology. Attitudes toward using sensory enabling technologies had a significant impact on the actual use of all three SETs; however, the impact of technology anxiety and innovativeness on the use of SET also appeared to differ by technology. Virtual try‐on played a strong hedonic role, increasing the entertainment value of the online shopping process, whereas 2D views (larger view and alternate views) showed a strong functional role. The 3D rotation view served both functional and hedonic roles. The results indicate that each sensory enabling technology makes a unique contribution to online shopping—either by reducing product risk perceptions or by increasing perceived entertainment value. © 2008 Wiley Periodicals, Inc.     

How Far Can BIM Reduce Information Asymmetry in the Australian Construction Context?

Building Information Modeling (BIM) systems are increasingly used in construction projects. Theoretically, these systems provide greater transparency and access to construction project information and, in doing so, should reduce the information asymmetry that commonly arises in construction contracting relationships. This typically occurs when suppliers of products and services opportunistically take advantage of the client due to the imbalance in information. The article therefore explores whether or not the high level of information content offered by BIM and the potential for sharing that information among contracting parties means that the information asymmetry can be alleviated using BIM. In order to investigate this, evidence was collected through three purposively sampled case studies of large principal organizations undertaking projects in Australia—each representing a different type of customer in the supply chain on construction projects. Our findings suggest a gap between the theoretical potential and practical application of BIM to reduce information asymmetry. The study found that, although BIM has the capability to reduce information asymmetry, it has not reached a mature enough stage in the Australian construction industry to clearly confirm that it actually reduces the problem. There is even a degree of evidence that, under certain circumstances, a reverse asymmetry may exist in which a client has the technical knowledge to more successfully analyze the BIM model (relative to the organizations they contract with) and then use the resulting information to their own opportunistic advantage.     

Product Cue Usage in Two Asian Markets: A Cross-Cultural Comparison

In this paper, we report cross-cultural differences in the use of intrinsic and extrinsic product cues (physical quality, design, brand name and price) on consumers' evaluations and purchase intentions for an apparel product in Shanghai, China and Seoul, South Korea. There were some differences in Chinese and Korean consumers' use of these cues in assessing the quality, value and purchase intentions; however, differences were not extensive. Consumers in both countries relied heavily on price acceptability to determine the value of the product; however, it was used to a greater extent among Chinese consumers to determine value. Our findings revealed that design was another intrinsic product attribute that impacts product evaluations and purchase decisions for both Chinese and Korean consumers. However, design was a stronger predictor of purchase intentions among Korean consumers. Brand name was not a strong cue in product evaluations for consumers in either country, although it was a significant predictor of value perceptions among Chinese consumers.     

The role of product brand image and online store image on perceived risks and online purchase intentions for apparel

Purchase intentions for apparel products often require physical examination prior to purchase. Hence, greater risk is associated with shopping online for apparel products, making it important to examine factors that reduce various risks influencing online purchase intentions. This study examines and compares the impact of two of the most important risk reducers for online apparel shopping – product brand image and online store image – on specific types of perceived risks and online purchase intentions for apparel. The results show that product brand image influences consumers' online purchase intentions both directly and indirectly by reducing various risk perceptions. Online store image impacts purchase intentions indirectly by decreasing risk perceptions. The results of this study provide fresh insight into understanding the impact of product brand image and online store image on each type of perceived risk associated with online shopping.     

Cooperation without Reputation: Experimental Evidence from Prisoner's Dilemma Games

This paper investigates cooperative play in prisoner's dilemma games by designing an experiment to evaluate the ability of two leading theories of observed cooperation: reputation building and altruism. We analyze both one-shot and finitely repeated games to gauge the importance of these theories. We conclude that neither altruism nor reputation building alone can explain our observations. The reputation model is inconsistent with play in both one-shots and finitely repeated games while the model with altruism is unable to explain observed play in the finitely repeated games.Journal of Economic LiteratureClassification Numbers: C72, C92.