15th Conference on the Economics of Information and Communication Technologies at ZEW

On 23 and 24 June 2017, around 80 international researchers visited the Centre for European Economic Research (ZEW) in Mannheim to attend the annual conference on the Economics of Information and Communication Technologies. The conference is jointly organised by ZEW’s Research Department “Digital Economy” and the Mannheim Centre for Competition and Innovation (MaCCI), and is partly funded by the German Research Foundation (DFG). This year, keynote speeches from Google chief economist Hal Varian and Amazon economist Steven Tadelis marked the highlights of the 15th annual conference.

In total, 38 current research projects were presented and subsequently discussed among scientists with a similar research interest. Of particular interest were those sessions with a focus on crowdfunding, sharing economy and big data. Professor Florian Stahl from the University of Mannheim and Professor Michael Zhang from the Hong Kong University of Science and Technology organised two sessions with invited speakers who offered insights into digital marketing strategies and online platforms.

Sellers on eBay use starting prices to signal their selling preferences

ZEW was particularly happy to welcome two high-ranking economists as keynote speakers. In his lecture, Hal Varian, professor emeritus at UC Berkeley and chief economist at Google since 2007, analysed the reasons for direct and indirect network effects on digital platforms. Among other things, his speech focused on improving product quality through learning by doing, a concept which plays a key role in online search engines. Varian closed his speech by addressing the topic of competition between digital platforms.

The second keynote speaker, Steven Tadelis, professor at the UC Berkeley and Vice President of Economics and Market Design at Amazon, explained which conclusions can be drawn from new online market data with regard to price negotiations. Together with his co-authors, he analysed data on millions of eBay transactions and particularly investigated the online platform’s function which allows potential buyers to exchange price proposals with sellers. On the basis of this data, researchers were for the first time able to move beyond lab experiments and investigate how sellers can eliminate existing information asymmetries in price negotiations by signalling their preferences in a credible way. As a key result, the study finds that some sellers set their initial price at a round number in order to signal that they are keen to sell an item quickly, which comes at the expense of selling for a higher price. These users tend to accept lower price proposals and are less likely to be tough negotiators than sellers who set specific starting prices. In his speech, Tadelis also shed light on the effects of experience, patience and social norms on negotiation strategies and outcomes.