Credence goods markets, distributional preferences and the role of institutions

Dominik Erharter ()

Working Papers from Faculty of Economics and Statistics, University of Innsbruck

Abstract: We study credence goods markets where an expert not only cares for her own monetary payoff, but also for the monetary payoff of her customer. We show how an expert with heterogeneous distributional preferences responds to monetary incentives in the absence of institutions, under liability and/or verifiability and identify optimal contracts for an expert with distributional preferences in each of these settings.

Keywords: other-regarding preferences; credence good; institution; contract theory; industrial organization (search for similar items in EconPapers)
JEL-codes: D63 D64 L13 L15 C72 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe, nep-cta and nep-mic
Date: 2012-06
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Persistent link: http://EconPapers.repec.org/RePEc:inn:wpaper:2012-11

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