Murphy-Economics Seminar: Silvana Krasteva (Texas A&M)

The Murphy Institute Seminar Series in Economics

Each semester The Murphy Institute sponsors a series of seminars organized by the Tulane Department of Economics that provides an opportunity for faculty, researchers, and practitioners to present their latest research and pressing issues related to topics in political economy. Research presented covers all aspects of contemporary economics, including the economics of education, health economics, and public economics, as well as in economic history, international economics, and core areas in political economy. 

Dr Silvana Krasteva is currently an Associate Professor in the Economics Department at Texas A&M University. Her research is in the area of applied microeconomic theory.

Abstract:
This paper examines competitive information disclosure in search markets with a mix of savvy consumers, who search costlessly, and inexperienced consumers, who face positive search costs. Savvy consumers incentivize truthful disclosure; inexperienced consumers, concealment. With both types, the equilibrium features partial disclosure, which persists despite intense competition: in large markets, firms always conceal low valuations. Inexperienced consumers may search actively, but only in small markets. While savvy consumers benefit from increased competition, inexperienced consumers may be harmed. Changes in search costs have non-monotone effects: when costs are low, sufficient reductions increase informativeness and welfare; when costs are high, the opposite.