Second Opinions in Markets for Expert Services: Experimental Evidence

Wanda Mimra (), Alexander Rasch and Christian Waibel
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Wanda Mimra: ETH Zurich, Switzerland

No 14/192, CER-ETH Economics working paper series from CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich

Abstract: We experimentally investigate the role of second opinions in markets where experts like doctors both diagnose and provide the services. Experts may exploit their informational advantage over customers and overtreat by providing a more costly and expensive treatment than necessary. We show that introducing costly second opinions significantly reduces the level of overtreatment. Market efficiency rises as the reduction in treatment costs—due to less overtreatment—exceeds the increase in incurred search costs. Lowering customers’ search costs leads to significantly more second opinions, however, the overtreatment level does not decrease.

Keywords: Credence goods; Experts; Second opinion; Overtreatment; Search costs. (search for similar items in EconPapers)
JEL-codes: D82 L15 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2014-02
New Economics Papers: this item is included in nep-cta, nep-exp and nep-ind
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Related works:
Journal Article: Second opinions in markets for expert services: Experimental evidence (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:eth:wpswif:14-192

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