TY  - GEN
AB  - We analyze a monopolistic model of quality uncertainty but
with the possibility of information acquisition on the consumer side. Infor-
mation is costly and its amount is chosen by the consumer. The analysis of
Bayesian equilibria shows the possibility of three equilibrium classes, only one
of which leaves positive utility to the consumer. The classic adverse selection
results of these markets are weakened in this situation. We show that cheaper
information does not necessarily benefit the consumer but can instead rule
out the buyer-friendly and welfare maximizing equilibria. Moreover, making
quality search arbitrarily efficient does not lead to sure selling of the high
quality product. A sustainable adverse selection effect, though weaker than
in the classical model, remains even in the limit.
DA  - 2014
KW  - Quality uncertainty
KW  - Price signaling
KW  - Adverse selection
KW  - Information acquisition
KW  - Two-sided incomplete information
LA  - eng
PY  - 2014
SN  - 0931-6558
SP  - 49-
TI  - Quality Uncertainty with Imperfect Information Acquisition
UR  - https://nbn-resolving.org/urn:nbn:de:0070-pub-29014541
Y2  - 2024-11-23T12:50:38
ER  -