The good, the bad and the complex: Product design with imperfect information
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- dc.contributor.author Asriyan, Vladimir
- dc.contributor.author Foarta, Dana
- dc.contributor.author Vanasco, Victoria
- dc.contributor.other Universitat Pompeu Fabra. Departament d'Economia i Empresa
- dc.date.accessioned 2024-11-14T10:09:43Z
- dc.date.available 2024-11-14T10:09:43Z
- dc.date.issued 2019-03-20
- dc.date.modified 2024-11-14T10:06:14Z
- dc.description.abstract We study the joint determination of product quality and complexity in a rational setting. We introduce a novel notion of complexity, which affects how difficult it is for an agent to acquire information about product quality. In our model, an agent can accept or reject a product proposed by a designer, who can affect the quality and the complexity of the product. Examples include banks that design financial products that they offer to retail investors, or policymakers who propose policies for approval by voters. We find that complexity is not necessarily a feature of low quality products. While an increase in alignment between the agent and the designer leads to more complex but better quality products, higher product demand or lower competition among designers leads to more complex and lower quality products. Our findings produce novel empirical implications on the relationship between quality and complexity, which we relate to evidence within the context of financial products and regulatory policies.
- dc.format.mimetype application/pdf*
- dc.identifier https://econ-papers.upf.edu/ca/paper.php?id=1643
- dc.identifier.citation American Economic Journal: Microeconomics 2023, 15(2): 187–226
- dc.identifier.uri http://hdl.handle.net/10230/44713
- dc.language.iso eng
- dc.relation.ispartofseries Economics and Business Working Papers Series; 1643
- dc.rights L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons
- dc.rights.accessRights info:eu-repo/semantics/openAccess
- dc.rights.uri http://creativecommons.org/licenses/by-nc-nd/3.0/es/
- dc.subject.keyword product design; information frictions; information transmission; signaling; complexity; regulation; financial products.
- dc.subject.keyword Macroeconomics and International Economics
- dc.title The good, the bad and the complex: Product design with imperfect information
- dc.title.alternative
- dc.type info:eu-repo/semantics/workingPaper