Economics of Strategy: Chapter 10: Information & Valuation CreationWa

What term best describes a firm informing customers about a product's benefits?

Disclosure

Which of the following is measured by a report that assesses how a product is produced?

Process

Conflicts of interest in the certifier market often can lead to which of the following?

Certification bias

Why is advertising an effective signal of quality in an experience good?

Consumers believe firms that can afford to heavily advertise sell quality products

Why do consumers tend to gravitate towards non-profit firms when evaluating credence goods?

Consumers believe non-profit sellers will be less likely to skimp on quality for profit

Products for which consumers cannot easily evaluate quality even after purchasing and using the product are called:

Credence goods

Which of the following is NOT a reason for customer survey bias in quality measures?

Customers often lie in consumer surveys

Unraveling is an economic theory that describes which of the following?

Even low quality sellers will disclose their product quality

Products for which consumers cannot easily compare product characteristics and value information from others are called:

Experience goods

Which of the following best describes the consumer's shopping problem?

Finding the seller that offers the highest value of B - P

Which of the following is NOT a way in which consumers can benefit from report cards?

Good report cards lead to more advertising

Which of the following is measured by a report card that assesses the components of a product?

Inputs

High quality certification in horizontally differentiated goods is aided by which of the following?

Internet firms like Google and

Which of the following would make an outcome report card difficult to produce?

Large sample of outcome measures

Which of the following is a source for horizontal differentiation?

Location

Which of the following would NOT reduce gaming of report cards?

Making firms pay for report card results

Which of the following terms describes when firms with high scores tend to have more than their share of luck in rankings?

Mean reversion

Which of the following is another term for "teaching to the test?"

Multitasking

Which of the following terms describes when efforts to promote improvements on one dimension of performance are confounded by changes in other dimensions of performance?

Multitasking

Which of the following is measured by a report card that assesses product performance?

Outcomes

Which of the following is a grade used to evaluate quality?

Report card

Which of the following is a statistical process in which raw outcome measures are adjusted for factors that are beyond the control of the seller?

Risk adjustment

Motivation bias and survivor bias are most common in which of the following?

Scorecards on horizontally differentiated products

Products for which consumers can easily obtain the information required to compare alternatives are called:

Search goods

Why would a report card that measures inputs possibly lead to multitasking?

Sellers may invest only in reported inputs but scale back on unreported inputs

When consumers learn about one seller at a time it is known as a :

Sequential search

When consumers learn about many products at once, it is known as a :

Simultaneous search

Why do consumers often rely on friends' advice when shopping for experience goods?

They know their friends' tastes

Which of the following serves as a voluntary signal of quality?

Warrantee

When is a signal informative?

When it is more profitable for the high quality firm to offer it