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Contribution Details

Type Working Paper
Scope Discipline-based scholarship
Title Bad news turned good: reversal under censorship
Organization Unit
  • Aleksei Smirnov
  • Egor Starkov
  • English
Institution University of Zurich
Series Name Working paper series / Department of Economics
Number 307
ISSN 1664-7041
Number of Pages 48
Date 2018
Abstract Text Sellers often have the power to censor the reviews of their products. We explore the effect of these censorship policies in markets where some consumers are unaware of possible censorship. We find that if the share of such “naive” consumers is not too large, then rational consumers treat any bad review that is revealed in equilibrium as good news about product quality. This makes bad reviews worth revealing and allows the high-type seller to use them as a costly signal of his product’s quality to rational consumers.
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Keywords Censorship, dynamic games, disclosure, moderated learning, Dynamisches Spiel, Zensur, Qualität, Bewertung, Verbraucherverhalten