Consumer information, product quality, and seller reputation
TLDR
The authors analyzes markets in which consumers are imperfectly informed about product quality and analyzes the relationship between consumer information and product quality, and shows that reputation can work only imperfectly.Abstract:
This article analyzes markets in which consumers are imperfectly informed about product quality. An important force that prevents deterioration of the quality supplied by sellers is the formation of firm-specific reputations. It is shown in general that reputations, because they can reward high quality production only with a lag, can work only imperfectly. Viewing reputation as an expectation of quality, this article studies the properties of quality expectations that are fulfilled. When sellers set quality once and for all, any self-fulfilling quality level must lie below the perfect information quality level. The same is true of steady-state quality levels when sellers can vary quality over time. Finally, the relationship between consumer information and product quality is explored.read more
Citations
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Book
Opinion Mining and Sentiment Analysis
Bo Pang,Lillian Lee +1 more
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A survey of trust and reputation systems for online service provision
TL;DR: Trust and reputation systems represent a significant trend in decision support for Internet mediated service provision as mentioned in this paper, where the basic idea is to let parties rate each other, for example after the completion of a transaction, and use the aggregated ratings about a given party to derive a trust or reputation score.
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The Digitization of Word of Mouth: Promise and Challenges of Online Feedback Mechanisms
TL;DR: Online feedback mechanisms harness the bidirectional communication capabilities of the Internet to engineer large-scale, word-of-mouth networks as discussed by the authors, which has potentially important implications for a wide range of management activities such as brand building, customer acquisition and retention, product development and quality assurance.
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Premiums for High Quality Products as Returns to Reputations
TL;DR: In this article, an equilibrium price-quality schedule for markets in which buyers cannot observe product quality prior to purchase is derived, and the effects of improved consumer information and of a minimum quality standard on the equilibrium price quality schedule are studied.
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Human Resource Systems and Sustained Competitive Advantage: A Competency-Based Perspective
Augustine A. Lado,Mary C. Wilson +1 more
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References
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Book ChapterDOI
A New Approach to Consumer Theory
TL;DR: In this article, the authors extend activity analysis into consumption theory and assume that goods possess, or give rise to, multiple characteristics in fixed proportions and that it is these characteristics, not goods themselves, on which the consumer's preferences are exercised.
Journal ArticleDOI
Free Competition and the Optimal Amount of Fraud
Michael R. Darby,Edi Karni +1 more
TL;DR: In this paper, the authors explore the reasons for and determinants of the provision by a firm of false information to a consumer so as to induce purchases which would not be made if the consumer possessed full information about the qualities of his purchase.
Journal ArticleDOI
Advertising as Information
TL;DR: In this paper, the major features of the behavior of advertising can be explained by advertising's information function, and it is shown that the most important information conveyed by advertising is simply that the brand advertises.
Journal ArticleDOI
Monopoly, quality, and regulation
TL;DR: In this paper, the authors argue that under regimes of monopoly and monopolistic competition, product characteristics (which are often endogenous variables) are not usually optimally set under the pressure of market forces, and that regulation is also beset with difficulties when price and quality are decision variables.