Cornière, Alexandre de and Taylor, Greg (2019) A model of biased intermediation. RAND Journal of Economics, vol. 50 (n° 4). pp. 854-882.

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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�
payo?s can be congruent or con?icting, and show that this has important implications
for the e?ects of bias. Under congruence, the ?rm bene?ting from bias has an incentive
to o?er a better deal than its rival and consumers can be better-o? than under no
bias. Under con?ict, the favored ?rm o?ers lower utility and bias harms consumers.
We study various policies for dealing with bias and show that their e?cacy also
depends on whether the payo?s exhibit congruence or con?ict.

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