The Economics of Advice

Winand Emons and Severin Lenhard

Diskussionsschriften from Universitaet Bern, Departement Volkswirtschaft

Abstract: A consumer wants to buy one of three different products. An expert observes which of the three products is the best match for the consumer. Under linear prices a monopolistic expert may truthfully reveal, may partially reveal, and may not reveal at all her information. The outcome is ineffcient; moreover, the consumer gets some of the surplus. With a two-part tariff the expert truthfully reveals her information. The outcome is effcient and the expert appropriates the entire surplus. If experts are competitive, they also truthfully reveal; here all the surplus goes to consumers.

Keywords: advice; credence good; horizontal product differentiation. (search for similar items in EconPapers)
JEL-codes: D18 D82 (search for similar items in EconPapers)
Date: 2022-11
New Economics Papers: this item is included in nep-com and nep-mic
References: Add references at CitEc
Citations:

Downloads: (external link)
https://repec.vwiit.ch/dp/dp2214.pdf (application/pdf)

Related works:
Working Paper: The Economics of Advice (2023)
Working Paper: The Economics of Advice (2023)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ube:dpvwib:dp2214

Access Statistics for this paper

More papers in Diskussionsschriften from Universitaet Bern, Departement Volkswirtschaft Contact information at EDIRC.
Bibliographic data for series maintained by Franz Koelliker ().