Abstract
Abstract Theoretical work on the pricing of information reveals that competition between independent information sellers can result in prices that are negatively related to the quality or reliability of the information. The theory argues that when information products are unreliable (low quality), independent products become complements, and competition can increase prices. The goal of this study is to test empirically the theory's counterintuitive predictions with the help of an experimental market based on a business simulation. Information products are market forecasts that are available from different competing information sellers; information buyers use these products to make repeated marketing decisions. Sellers set prices to maximize their profit, and buyers decide from which sellers to buy to maximize their own profit (through their marketing decisions). Buyers and sellers are assigned to one of two quality conditions: high-quality, reliable information and low-quality, unreliable information. The...
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