Ripoffs, lemons, and reputation formation in agency relationships: a laboratory market study

Article Abstract:

Research into the problem of moral hazard related to services provided by agents to a clientele that is incapable of assessing the quality of these services indicates that the clients' lack of expertise results in the agent's not performing the services as well as possible. Despite the importance of reputation in marketing service to clientele, service companies may 'rip off' their clients and maintain a reputable image. The research is performed on laboratory markets, and develops three models: the ripoffs model, the lemons model, and the reputation model. The discussion following the research presentation focuses on an alternative approach to the reputation model.

Research, Models, United States, Financial services industry, Financial services, Services, Investment advisers, Services industry, Service industries, Business consultants, Management consultants

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Crossing networks and dealer markets: competition and performance

Article Abstract:

Research indicates that traders who limit themselves to the crossing network produce a counterbalancing effect by reducing inventory holding costs and adverse selection. Passive crossing networks are defined as direct trading between sellers and buyers, and are characterized by crowding, or negative, and liquid, or positive, externalities.

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Imperfect competition among informed traders

Article Abstract:

A continuous-time model is used to analyze competition in trading. It is posited that linear equilibrium exists when trader signals are not perfectly correlated, but does not exist when they are, and that levels of private information at the end of trading steer the market toward complete illiquidity.

Analysis, Competition (Economics), Floor traders (Finance)

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