Secondary Titles (1)
- Robert James Waller Professor in Economics and Personal Freedom
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)
Areas of Expertise (4)
Dean’s Teaching List (professional)
2004, 2005, 2006, 2008, 2009, 2011
Awarded by the Kelley School of Business at Indiana University
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
Event Appearances (5)
International Industrial Organization Conference Chicago, Illinois
Comparative Price Signaling by a Multiproduct Monopolist
VIth Conference on the Economics of Advertising Tel Aviv, Israel
Informs Marketing Science Conference Boston, Massachusetts
International Industrial Organization Conference Boston, Massachusetts
International Industrial Organization Conference Savannah, Georgia
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 ...
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 ...
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 ...
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 ...
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 ...