Rick Harbaugh
Associate Professor of Business Economics | Indiana University, Kelley School of Business
Bloomington, IN, UNITED STATES
Rick Harbaugh's research focuses on game theory, managerial economics, the Chinese economy and internet economics.
Secondary Titles (1)
- Robert James Waller Professor in Economics and Personal Freedom
Biography
Rick Harbaugh's research analyzes how firms and individuals can credibly convey information—how a firm can prove that its products are high quality, how an advertisement can successfully persuade a consumer, how a stock analyst can credibly rate a stock, or how a manager can prove her ability. Harbaugh shows that costless, unverifiable "cheap talk" is a more powerful communication tool than one might think (Cheap Talk Comparisons, Best Foot Forward, Comparative Cheap Talk, Persuasion by Cheap Talk, Biased Recommendations, Persuasive Puffery) and that costly "signaling" and verifiable "persuasion" are less reliable communication tools than one might think (Countersignaling, False Modesty, Label Confusion, Coarse Grades).
Industry Expertise (3)
Research
Education/Learning
Market Research
Areas of Expertise (4)
Managerial Economics
Internet Economics
Chinese Economy
Game Theory
Accomplishments (1)
Dean’s Teaching List (professional)
2004, 2005, 2006, 2008, 2009, 2011 Awarded by the Kelley School of Business at Indiana University
Education (4)
Yale School of Management: Postdoctoral Study 1999
University of Pittsburgh: Ph.D., Economics 1997
National Taiwan University: M.A., Economics 1992
University of Pennsylvania: B.A. (Hons), Economics 1986
Links (1)
Event Appearances (5)
Biased Recommendations
International Industrial Organization Conference Chicago, Illinois
2014-04-11
Comparative Price Signaling by a Multiproduct Monopolist
VIth Conference on the Economics of Advertising Tel Aviv, Israel
2013-06-26
Persuasive Puffery
Informs Marketing Science Conference Boston, Massachusetts
2012-06-07
Coarse Grades
International Industrial Organization Conference Boston, Massachusetts
2009-04-03
Label Confusion
International Industrial Organization Conference Savannah, Georgia
2007-04-13
Articles (8)
False modesty: When disclosing good news looks bad
Journal of Mathematical Economics
2020 Is it always wise to disclose good news? Using a new statistical dominance condition, we show that if the receiver has any private receiver information then the weakest senders with good news gain the most from boasting about it. Hence the act of disclosing good news can paradoxically make the sender look bad.
Coarse Grades: Informing the Public by Withholding Information
American Economic Journal: Microeconomics
2018 Grades are often coarse. Rather than an exact number or rank, a grade is usually only a rough indication of quality, such as a letter grade or even just a binary pass-fail grade. Safety organizations usually certify that a product is safe with a seal of approval that does not indicate whether the product passed tests just barely or by a wide margin. Environmental organizations typically certify environmental quality with a simple “
Biased recommendations from biased and unbiased experts
Wiley
2018 When can you trust an expert to provide honest advice? We develop and test a recommendation game where an expert helps a decision maker choose among two actions that benefit the expert and an outside option that does not. For instance, a salesperson recommends one of two products to a customer who may instead purchase nothing.
Opportunistic Discrimination
European Economic Review
2014 Are minorities more vulnerable to opportunism? We find that individuals from a minority group face greater danger of being cheated because trade with them is less frequent and the value of a reputation for fairness toward them is correspondingly smaller. When the majority is sufficiently large it can only lose from a solidarity strategy of punishing opportunism against the minority, so a firm that cheats the minority can still continue business as usual with the majority. If there is a small chance that a firm might have an implicit or preference bias against either group, then ...
Persuasive Puffery
Marketing Science
2013 Sellers often make claims about product strengths without providing evidence. Even though such claims are mere puffery, we show that they can be credible because talking up any one strength comes at the implicit trade-off of not talking up another potential strength. Puffery pulls in some buyers who value product attributes that are talked up or emphasized while pushing away other buyers who infer that the attributes they value are relative weaknesses. When the initial probability of making a sale is low, there are more potential buyers to pull in than to push away, so puffery ...
Label Confusion: The Groucho Effect of Uncertain Standards
Management Science
2011 Labels certify that a product meets some standard for quality, but often consumers are unsure of the exact standard that the label represents. Focusing on the case of ecolabels for environmental quality, we show how even small amounts of uncertainty can create consumer confusion that reduces or eliminates the value to firms of adopting voluntary labels. First, consumers are most suspicious of a label when a product with a bad reputation has it, so labels are often unpersuasive at showing that a seemingly bad product is actually good. Second, label proliferation ...
Persuasion by Cheap Talk
The American Economic Review
2010 We consider the credibility, persuasiveness, and informativeness of multidimensional cheap talk by an expert to a decision maker. We find that an expert with state-independent preferences can always make credible comparative statements that trade off the expert's incentive to exaggerate on each dimension. Such communication benefits the expert—cheap talk is “persuasive”—if her preferences are quasiconvex. Communication benefits a decision maker by allowing for a more informed decision, but strategic interactions between multiple decision makers can reverse this ...
Does Copyright Enforcement Encourage Piracy?
The Journal of Industrial Economics
2010 When copyright enforcement is targeted at high-value buyers such as corporate and government users, the copyright holder charges super-monopoly prices, thereby encouraging low-value buyers to switch to inferior pirated copies. We show that enlarging the copyright holder's captive market through more extensive copyright enforcement reduces prices toward the monopoly level, increases sales of legitimate copies and can increase consumer surplus. Therefore, in contrast with the case of more intensive copyright enforcement, more extensive copyright enforcement over ...