Quality Infomediation in Search Markets

23 Pages Posted: 1 Jun 2006 Last revised: 5 Dec 2007

See all articles by John R. Kennes

John R. Kennes

VIVE - The Danish Centre of Applied Social Science

Aaron Schiff

Independent

Date Written: December 3, 2007

Abstract

We examine the effects of informational intermediation by a third party 'infomediary' in a search model with heterogeneous seller qualities and asymmetric information. The infomediary earns revenue by selling a list of accredited sellers (a 'guidebook') to buyers and selling accreditations to sellers. We show that such information always improves welfare but can hurt informed buyers (as well as the uninformed) if it is not sufficiently informative about seller qualities. The model also provides a number of insights concerning the private and social incentives to create information, and the determinants and nature of demand for infomediation services by buyers and sellers.

Keywords: informational intermediation, asymmetric information, search

JEL Classification: L15, D82, D83

Suggested Citation

Kennes, John Robert and Schiff, Aaron, Quality Infomediation in Search Markets (December 3, 2007). Available at SSRN: https://ssrn.com/abstract=905173 or http://dx.doi.org/10.2139/ssrn.905173

John Robert Kennes

VIVE - The Danish Centre of Applied Social Science ( email )