Conclusions
The conclusion seems incomplete as negative ratings of online sellers would need to strongly correlate with low bidding to make adverse selection completely proven in this study. The fact that there is no strong correlation in this study to negative rankings, a foundational element of asymmetric information, makes one see the research as incomplete in its design.
Selection of Independent and Dependent Variables
The research design is incomplete in that it does not capture sales lost due to prices being too high and statistically proving the full hypothesis of adverse selection. The selection of the studies' independent variables quantified and validates high trust emanating from proven reputation systems. It does not however show the full elasticity of adverse selection on the price bands of cars sold on Ebay Motors. There is no demand curve, and further, no demand variable captured in this analysis, making elasticity of demand impossible to measure. Without that, the full impact of adverse selection cannot fully be explained.
Refuting an Online Auction Adverse Selection Hypothesis
As the research from Wolf and Muhanna (2005) shows, there are statistically significant results highlighting the effectiveness of online auto auction sites using warranties and reputation systems that validate a seller's reliability,...
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