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The impact of distributional preferences on (experimental) markets for expert services

Kerschbamer, Rudolf, Sutter, Matthias, & Dulleck, Uwe (2009) The impact of distributional preferences on (experimental) markets for expert services. In Proceedings of Econometric Society Australasian Meeting in 2009 (ESAM09), Australian National University, The Australian National University, Canberra, ACT, pp. 1-26.

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Abstract

Theory predicts that efficiency prevails on credence goods markets if customers are able to verify which quality they receive from an expert seller. In a series of experiments with endogenous prices we observe that verifiability fails to result in efficient provision behaviour and leads to very similar results as a setting without verifiability. Some sellers always provide appropriate treatment even if own money maximization calls for over- or undertreatment. Overall our endogenous-price-results suggests that both inequality aversion and a taste for efficiency play an important role for experts’ provision behaviour. We contrast the implications of those two motivations theoretically and discriminate between them empirically using a fixed-price design. We then classify experimental experts according to their provision behaviour.

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ID Code: 32445
Item Type: Conference Paper
Additional Information: This conference paper was submitted to HERDC 2010 under the name Verifiability in Markets for Credence Goods.
Additional URLs:
Keywords: Credence goods, Experts, Verifiability, Inequality aversion, Preferences for efficiency
Subjects: Australian and New Zealand Standard Research Classification > ECONOMICS (140000) > APPLIED ECONOMICS (140200) > Industry Economics and Industrial Organisation (140209)
Australian and New Zealand Standard Research Classification > ECONOMICS (140000) > APPLIED ECONOMICS (140200) > Experimental Economics (140206)
Divisions: Current > QUT Faculties and Divisions > QUT Business School
Current > Schools > School of Economics & Finance
Copyright Owner: Copyright 2009 [please consult the authors]
Deposited On: 03 Jun 2010 14:31
Last Modified: 11 Aug 2011 03:42

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