Verifiability in Markets for Credence Goods

Dulleck, Uwe, Kerschbamer, Rudolf, & Sutter, Matthias (2009) Verifiability in Markets for Credence Goods. In Anderson, H & Racionero , M (Eds.) The proceedings of the Econometric Society Australasian Meeting, Australian National University, Canberra, ACT, pp. 1-26.

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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 variability fails to result in efficient provision behavior and leads to very similar results as a setting without variability. 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 behavior. We contrast the implications of those two motivations theoretically and discriminate between them empirically using a �xed-price design. We then classify experimental experts according to their provision behavior.

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ID Code: 48491
Item Type: Conference Paper
Refereed: Yes
Subjects: Australian and New Zealand Standard Research Classification > ECONOMICS (140000) > APPLIED ECONOMICS (140200)
Divisions: Current > QUT Faculties and Divisions > QUT Business School
Current > Schools > School of Economics & Finance
Deposited On: 07 Feb 2012 05:55
Last Modified: 01 Mar 2012 03:50

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