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about whether a low-cost service is sufficient or whether a high-cost treatment is required to solve the consumerś problem … objective outcome but only the consumerś report, or subjective evaluation. A failure of the low-cost treatment delays the … solution of the consumerś problem by the high-cost treatment to a second period. We show that the first-best solution can …
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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 consumer's problem. This involves moral hazard because diagnosis effort and...
Persistent link: https://www.econbiz.de/10010436207
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 consumer's problem. This involves moral hazard because diagnosis effort and...
Persistent link: https://www.econbiz.de/10010436518