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Product Quality Signaling in Experimental Markets

Miller, Ross M. and Plott, Charles R. (1985) Product Quality Signaling in Experimental Markets. Econometrica, 53 (4). pp. 837-872. ISSN 0012-9682. doi:10.2307/1912657.

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In a series of eleven markets, sellers possessed products that were exogenously designated as either grade "regular" or grade "super." Supers were valued more by buyers but grade could not be observed by buyers prior to purchase. Sellers could add costly units of quality to their products that were observable and valued by buyers. The data are analyzed with perfect information models, signaling equilibrium models, and pooling models. A variety of behaviors are observed across the eleven markets. Signaling is observed in most markets with some markets approaching the most efficient signaling equilibrium. Pooling or partial pooling occurs in a few markets. The performance seems to be sensitive to the relative cost of signaling and the market institutional setting.

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Additional Information:© 1985 The Econometric Society. The financial support of the National Science Foundation and the Caltech Program for Enterprise and Public Policy is gratefully acknowledged. Professor Plott also wishes to acknowledge the support of the Guggenheim Foundation and the Center for Advanced Study in the Behavioral Sciences. We thank Charles Holt, Mary O'Keeffe, and Michael Spence for helpful comments.
Group:Social Science Working Papers
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Caltech Program for Enterprise and Public PolicyUNSPECIFIED
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Social Science Working Paper447
Issue or Number:4
Record Number:CaltechAUTHORS:20140324-144825915
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Official Citation:Product Quality Signaling in Experimental Markets Ross M. Miller and Charles R. Plott Econometrica, Vol. 53, No. 4 (Jul., 1985), pp. 837-872 Published by: The Econometric Society Article DOI: 10.2307/1912657 Article Stable URL:
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:44476
Deposited By: Susan Vite
Deposited On:01 Apr 2014 21:49
Last Modified:10 Nov 2021 16:52

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