The Market for Evaluations
Christopher Avery, Paul Resnick, Richard Zeckhauser
American Economic Review · 1999 · Volume 89 · Issue 3
Abstract
Recent developments in computer networks have driven the cost of distributing information virtually to zero, creating extraordinary opportunities for sharing product evaluations. The authors present pricing and subsidy mechanisms that operate through a computerized market and induce the efficient provision of evaluations. The mechanisms overcome three major challenges: first, evaluations, which are public goods, are likely to be underprovided; second, an inefficient ordering of evaluators may arise; and third, the optimal quantity of evaluations depends on what is learned from the initial evaluations.
Keywords
Information and Product Quality, Standardization and Compatibility, Search, Learning, Information and Knowledge, Communication, Belief, Technological Change: Choices and Consequences, Diffusion Processes
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