A Model of Biased Intermediation

Cornière (de), Alexandre and Taylor, Greg (2020) A Model of Biased Intermediation. RAND Journal of Economics. (In Press)

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Official URL: http://tse-fr.eu/pub/123219

Abstract

We study situations in which consumers rely on a biased intermediary’s advice
when choosing among sellers. We introduce the notion that sellers’ and consumers’
payoffs can be congruent or conflicting, and show that this has important implications
for the effects of bias. Under congruence, the firm benefiting from bias has an incentive
to offer a better deal than its rival and consumers can be better-off than under no
bias. Under conflict, the favored firm offers lower utility and bias harms consumers.
We study various policies for dealing with bias and show that their efficacy also
depends on whether the payoffs exhibit congruence or conflict.

Item Type: Article
Language: English
Date: 2020
Refereed: Yes
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 24 Jul 2019 09:09
Last Modified: 25 Jul 2019 12:35
OAI ID: oai:tse-fr.eu:123219
URI: http://publications.ut-capitole.fr/id/eprint/32644

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