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The Economics of Credence Goods: On the Role of Liability, Verifiability, Reputation and Competition

Dulleck, Uwe; Kerschbamer, Rudolf; Sutter, Matthias - 2009

determinants for efficiency in credence goods markets. While theory predicts that either liability or verifiability yields … efficiency, we find that liability has a crucial, but verifiability only a minor effect. Allowing sellers to build up reputation …

Persistent link: https://www.econbiz.de/10010294835

Credence goods, costly diagnosis, and subjective evaluation

Bester, Helmut; Dahm, Matthias - 2014

We study contracting between a consumer and an expert. The expert can invest in diagnosis to obtain a noisy signal about whether a low-cost service is sufficient or whether a high-cost treatment is required to solve the consumerś problem. This involves moral hazard because diagnosis effort and...

Persistent link: https://www.econbiz.de/10010429934

Guilt from Promise-Breaking and Trust in Markets for Expert Services - Theory and Experiment

Beck, Adrian; Kerschbamer, Rudolf; Qiu, Jianying; … - 2010

experts make the predicted promise; (2) proper promises induce consumer-friendly behavior; and (3) higher interaction prices …

Persistent link: https://www.econbiz.de/10010294816

The role of diagnostic ability in markets for expert services

Liu, Fang; Rasch, Alexander; Schwarz, Marco; Waibel, … - 2020

In credence goods markets, experts have better information about the appropriate quality of treatment than their … customers. Experts may exploit their informational advantage by defrauding customers. Market institutions have been shown … situation in which experts are heterogeneous in their diagnostic abilities. We find that efficient market outcomes are always …

Persistent link: https://www.econbiz.de/10012315945

Fact-checking politicians

Mattozzi, Andrea; Nocito, Samuel; Sobbrio, Francesco - 2022

We investigate the reaction of Italian Members of Parliament to a rigorous fact-checking of their public statements. Our research design relies on a novel randomized field experiment in collaboration with the leading Italian fact-checking company. Our results show that politicians are responsive...

Persistent link: https://www.econbiz.de/10013463503

Dynamic screening with verifiable bankruptcy

Krähmer, Daniel; Strausz, Roland - 2022

We consider a dynamic screening model where the agent may go bankrupt due to, for example, cash constraints. We model bankruptcy as a verifiable event that occurs whenever the agent makes a per period loss. This leads to less stringent truth-telling constraints than those considered in the...

Persistent link: https://www.econbiz.de/10014476119

Second-degree moral hazard in a real-world credence goods market

Balafoutas, Loukas; Kerschbamer, Rudolf; Sutter, Matthias - 2013 - This version: 16 October 2013

Empirical literature on moral hazard focuses exclusively on the direct impact of asymmetric information on market outcomes, thus ignoring possible repercussions. We present a field experiment in which we consider a phenomenon that we call second-degree moral hazard – the tendency of the supply...

Persistent link: https://www.econbiz.de/10010199693