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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

Algorithmic advice as a credence good

Biermann, Jan; Horton, John J.; Walter, Johannes - 2022

Actors in various settings have been increasingly relying on algorithmic tools to support their decision-making. Much of the public debate concerning algorithms - especially the associated regulation of new technologies - rests on the assumption that humans can assess the quality of algorithms....

Persistent link: https://www.econbiz.de/10013499021

Experts vs. discounters: Consumer free riding and experts withholding advice in markets for credence goods

Dulleck, Uwe; Kerschbamer, Rudolf - 2007

This paper studies the incentives for credence goods experts to invest effort in diagnosis if effort is both costly and … effort and the credence characteristic of the good induces experts to choose incentive compatible tariff structures. This … makes them vulnerable to competition by discounters. We explore the conditions under which honestly diagnosing experts …

Persistent link: https://www.econbiz.de/10010293427

Trust in health care credence goods: Experimental evidence on framing and subject pool effects

Angerer, Silvia; Glätzle-Rützler, Daniela; Waibel, … - 2021

between experts and consumers. The functioning of the market heavily relies on trust on the side of the consumer as well as … behavior of experts, however, is not significantly influenced by the health care framing, nor by the subject pool. …

Persistent link: https://www.econbiz.de/10012614675

The good, the bad and the naive: Do fair prices signal good types or do they induce good behaviour?

Dulleck, Uwe; Johnston, David; Kerschbamer, Rudolf; … - 2012

Evidence on behavior of experts in credence goods markets raises an important causality issue: Do "fair prices" induce … "good behavior", or do "good experts" post "fair prices"? To answer this question we propose and test a model with three … selection and fixed effects regressions support the model's predictions and show that causality goes from good experts to fair …

Persistent link: https://www.econbiz.de/10010312241

Optimal procurement of a credence good under limited liability

Bester, Helmut; Yaofu, Ouyang - 2017

This paper analyzes the optimal contract for a consumer to procure a credence good from an expert when (i) the expert might misrepresent his private information about the consumer’s need, (ii) the expert might not choose the requested service since his choice of treatment is non-observable,...

Persistent link: https://www.econbiz.de/10011781931

Credence goods markets and the informational value of new media: A natural field experiment

Kerschbamer, Rudolf; Neururer, Daniel; Sutter, Matthias - 2019

Credence goods markets are characterized by pronounced informational asymmetries between consumers and expert sellers. As a consequence, consumers are often exploited and market efficiency is threatened. However, in the digital age, it has become easy and cheap for consumers to self-diagnose...

Persistent link: https://www.econbiz.de/10012140878

Uncovering sophisticated discrimination with the help of credence goods markups: Evidence from a natural field experiment

Hall, Jonathan; Kerschbamer, Rudolf; Neururer, Daniel; … - 2019

We present the results of a pre-registered natural field experiment designed to uncover a sophisticated form of discrimination against an immigrant minority in a market for credence goods. For this purpose, we introduce two markups: (i) the credence goods markup defined as the difference between...

Persistent link: https://www.econbiz.de/10012140887

Status and Reputation Nudging

Rose, Julia; Kirchler, Michael; Palan, Stefan - 2019

Status and reputation concerns are conjectured to be important especially in markets with information asymmetries between buyers and sellers, such as in credence goods markets. To investigate the effects of status and reputation on reciprocal behavior of sales personnel in a financial credence...

Persistent link: https://www.econbiz.de/10012609008

Customer Disputes, Misconduct, and Reputation Building in the Market for Financial Advice

Ulrichshofer, Anna; Walzl, Markus - 2020

We analyze the impact of records of denied and withdrawn customer complaints on job separation in a dataset based on FINRA's Broker-Check database with more than 3 mio. financial advisers. Compared to misconduct that actually leads to a conviction of the adviser, denied and withdrawn complaints...

Persistent link: https://www.econbiz.de/10012609029