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Luksetich, Edwards, and Carroll 2000). This would suggest that it would be rational to use ownership as a quality indicator. It is also important to note that legislation had not significantly changed in the state in a way that would affect primarily nonprofit or for-profit organization in this sample, as was the case for Noguchi and Shimizutani (2005), who admitted that a recently changed regulatory environment could have impacted their results. Also, we disentangle the effects ownership and religious affiliation by asking whether each were used as selection criteria, and we quizzed consumers to determine whether they were aware of ownership type. In addition, we analyzed whether consumers who search more extensively, or those who rely on the extensive search of others (using reputation as a search criterion), were more likely to choose nonprofit, local government or for-profit firms due to the information that they gather, controlling for whether they use ownership as a signal and several search constraints. ? ?

6 Theory and Hypotheses THE MARKET FOR LEMONS In a market where there is asymmetric information between the buyers and the sellers regarding the products they transact, how consumers make buying decisions is an important research question. Asymmetric information refers to a situation in which sellers have superior knowledge of the essential attributes of their product or service, such as its quality and effectiveness, than buyers. This offers sellers the opportunity to exploit their superior information by portraying the quality of their product or service as higher than it is in actuality. When consumers are aware of the asymmetric information problem, the market will reach an equilibrium where the average quality is lower than that which would prevail under complete information, and some consumers will not participate in the market at all (Akerlof 1970). Sellers who do not want to take advantage of the opportunities offered by asymmetric information by misrepresenting their products will likely be driven out of business by those who are taking advantage of those opportunities and who will sell what is perceived to be the same quality at lower prices, in the bad money driving out good money fashion. Exploitation of asymmetric information has been blamed........