Next Article in Journal
Hierarchical Structures and Leadership Design in Mean-Field-Type Games with Polynomial Cost
Previous Article in Journal
Numerical Solution of Open-Loop Nash Differential Games Based on the Legendre Tau Method
Article

Signalling, Information and Consumer Fraud

Department of Economics, Universidad Católica de la Santísima Concepción, Alonso de Ribera, Concepción 2850, Chile
Games 2020, 11(3), 29; https://doi.org/10.3390/g11030029
Received: 12 May 2020 / Revised: 23 July 2020 / Accepted: 28 July 2020 / Published: 30 July 2020
In a two-sided asymmetric information market, the role of the accuracy of consumers’ imperfect and private information on the level of fraud, incidence of fraud and trade under price rigidity is examined. Consumers receive a costless but noisy private signal of quality. The product offered in the market can be of two exogenously given qualities and it is common knowledge that the consumer is not willing to pay a high price for a low quality product. A low quality seller chooses to be either honest (by charging the lower market price) or dishonest (by charging the higher price). We show that equilibria involving fraud exist for all parameter values. Furthermore, for some parameter values, we find that -in equilibrium- a higher precision of consumers’ private information leads to higher levels of fraud and incidence of fraud, reducing consumers’ welfare. We provide conditions for the public revelation of consumers’ private information to be a Pareto improvement. View Full-Text
Keywords: consumer fraud; incomplete information; information structure; price signalling consumer fraud; incomplete information; information structure; price signalling
Show Figures

Figure 1

MDPI and ACS Style

Martinez-Gorricho, S. Signalling, Information and Consumer Fraud. Games 2020, 11, 29. https://doi.org/10.3390/g11030029

AMA Style

Martinez-Gorricho S. Signalling, Information and Consumer Fraud. Games. 2020; 11(3):29. https://doi.org/10.3390/g11030029

Chicago/Turabian Style

Martinez-Gorricho, Silvia. 2020. "Signalling, Information and Consumer Fraud" Games 11, no. 3: 29. https://doi.org/10.3390/g11030029

Find Other Styles
Note that from the first issue of 2016, MDPI journals use article numbers instead of page numbers. See further details here.

Article Access Map by Country/Region

1
Back to TopTop