Kenan Kalayci
Job Market Candidate
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Research Interests: Industrial Organisation, Behavioral Economics, Experimental Economics |
Job Market Paper:
Buyer Confusion and Market Prices, with Jan Potters (revise and resubmit to International Journal of Industrial Organization).
We employ a price setting duopoly experiment to examine whether buyer confusion increases market prices. Each seller offers a good to buyers who have homogeneous preferences. Sellers decide on the number of attributes of their good and set prices. The number of attributes bears no cost to the sellers and does not affect the value of the good to the buyers but adds complexity to buyers' evaluation of the goods. The experimental results indicate that the buyers make more suboptimal choices and that prices are higher when the number of attributes of the goods is higher. Moreover, prices and profits are higher than those in a benchmark treatment with perfectly rational (robot) buyers.
Working Papers:
Price Complexity and Buyer Confusion in Posted Offer Markets
This paper reports an experiment that examines the effects of price complexity on market prices. In my experimental posted-offer markets, each seller offers an identical good to buyers with homogeneous preferences. First, sellers simultaneously decide on the price and the tariff structure of their good, then buyers make their choices among the goods. Each seller can choose to have a one, two or three-part tariffs. The tariff structure affects neither the value nor the price of the good. However, having a higher number of tariffs makes it harder for buyers to calculate the price of the good. Main results, in line with (Carlin, 2009) show that prices are higher when the sellers can confuse buyers using price complexity than when they interact with perfectly rational robot buyers.
Does increased competition hurt boundedly rational buyers?
This paper examines the effects of competition in experimental posted-offer markets where sellers can confuse buyers. I report two studies. In one, the sellers offering heterogeneous goods can obfuscate buyers by means of spurious product differentiation. In the other study, sellers offer identical goods and make their prices unnecessarily complex by having multi-part tariffs. I vary the level of competition by having treatments with two- and three sellers. The results from both studies show that market prices are lower when there are three rather than two sellers in a market. The average complexity created by a seller is not affected by the number of sellers in a market, which contrasts with what has been suggested by earlier literature (Gabaix and Laibson, 2004; Carlin, 2009).
Awards:
Runner-up for the Arijit Mukherji Memorial Best Paper Award, APESA2009, University of Haifa.
Teaching:
Instructor for Financial Economics
Office hours: Tuesday 15.00-16.00 or by appointment.
See also:
Contact:
CentERPO Box 90153
5000 LE Tilburg
The Netherlands