MUST SELL

L CABRAL, J SAKOVICS

Research output: Contribution to journalArticlepeer-review

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.

Original languageEnglish
Pages (from-to)55-68
Number of pages14
JournalJournal of Economics and Management Strategy
Volume4
Issue number1
DOIs
Publication statusPublished - 1995

Keywords

  • VALUES

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