Good Rankings Are Bad: Why Reliable Rankings Can Hurt Consumers / Laurent Bouton, Georg Kirchsteiger.

Format:

Book

Author/Creator:

Bouton, Laurent.

Contributor:

National Bureau of Economic Research.

Kirchsteiger, Georg.

Series:

Working Paper Series (National Bureau of Economic Research) no. w21083.

NBER working paper series no. w21083

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Good Rankings Are Bad

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2015.

Summary:

Rankings have become increasingly popular on various markets, e.g. the market for study programs. We analyze their welfare implications. Consumers have to choose between two goods of unknown quality with exogenous presence or absence of an unbiased informative ranking. The existence of the ranking might affect the welfare of all consumers negatively. With rigid prices, the ranking induced change in demand can be detrimental to all consumers in markets featuring rationing or consumption externalities. With perfectly flexible prices, the ranking might increase firms' market power, and hence lead to losses for all consumers even in the absence of rationing and consumption externalities.

Notes:

Print version record

April 2015.