We found a match
Your institution may have access to this item. Find your institution then sign in to continue.
- Title
From 'Lemons' to Lemonade: Lessening the Impact of Adverse Selection through Buyer Trust.
- Authors
Gray, Gordon T.; Wert ‐ Gray, Stacia; Carlon, Donna
- Abstract
ABSTRACT This research extends overlapping streams of research examining asymmetric information, adverse selection, and buyer trust by presenting an empirical investigation of the process by which a market for 'lemons' emerges in the claiming market for thoroughbred racehorses. The study focuses attention on the potential of quality signals and buyer trust to lessen the impact of adverse selection. Incorporating concepts from economics, marketing, and psychology, a conceptual model suggests that adversely selected racehorses, distinguished by an unintentional signal from sellers to potential buyers, will be priced lower than otherwise similar racehorses perceived to be less subject to adverse selection. Data from one day of claiming races at 16 American racetracks (744 racehorses) are used to test this study hypothesis. Results provide evidence for adverse selection and a mitigating quality signal in the thoroughbred claiming market. Implications for buyers and sellers in this market, as well as more general implications, are discussed and an avenue for future research is proposed.
- Subjects
ADVERSE selection (Commerce); CUSTOMER loyalty; TRUST; CONSUMER attitude research; THOROUGHBRED horse; RACE horses; PSYCHOLOGY; PRICES
- Publication
Psychology & Marketing, 2013, Vol 30, Issue 4, p332
- ISSN
0742-6046
- Publication type
Article
- DOI
10.1002/mar.20609