, verifiability fails to yield efficiency in experiments with endogenous prices. We identify heterogeneous distributional preferences … as the main cause and design a parsimonious experiment with exogenous prices that allows classifying experts as either …

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 …

In markets for credence goods – such as health care or repair services – fraudulent behavior by better informed experts … is a common problem. Our model studies how four common features shape experts’ provision behavior in credence goods … markets: (i) diagnostic uncertainty of experts; (ii) insurance coverage of consumers; (iii) malpractice payments for treatment …

also uncover an important interaction effect: if consumers are insured, experts invest less in diagnostic precision. We …