Seminars

Abstract: We design a novel insurance advice mechanism aimed at promoting trust and cooperation in markets with asymmetric information. In a buyer-seller game, sellers are given the option to advise buyers on whether to purchase third-party insurances against the potential losses from sellers’ strategic behavior. The theoretical model suggests that both cooperative and strategic sellers will advise buyers not to purchase the insurance. Once this advice has been given, strategic sellers are less likely to pursue self-interest due to the associated psychological costs. We conduct a controlled laboratory experiment and show that the insurance advice mechanism significantly increases market efficiency, with sellers being more likely to cooperate and buyers being more likely to purchase from the seller, especially when sellers can observe buyers’ insurance purchase decisions.

* 본 세미나는 VEAEBES(Virtual East Asia Experimental and Behavioral Economics Seminar series) 주최로 열리는 세미나입니다.

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* 본 세미나는  BK 관련 세미나 참석으로 인정됩니다.