Billing Abuses by the Experts: A Game-Theoretic Analysis of Legal Services

Chris Kuo ()
Additional contact information
Chris Kuo: School of Management, Boston University, U.S.A.

Journal of Economics and Management, 2013, vol. 9, issue 1, 13-30

Abstract: Billing abuses exist when an expert charges the expert hourly rate but offers quality that does not match the charge. This paper provides a game-theoretic analysis so that, when the quality of an expert's services is unobservable to consumers before purchase, hourly rate competition can eliminate the profits necessary to induce the expert to offer the quality services. This paper further demonstrates that the threat of business termination by customers is not sufficiently credible to ensure that the experts will produce high quality services. Given the fact that billing abuses always exist, this paper suggests that auditing by the customers is necessary to reduce the overcharged amount, and customers have to audit a high percentage of the billed amount.

Keywords: asymmetric information; sub-game perfect equilibrium; credence service (search for similar items in EconPapers)
JEL-codes: C7 D82 G22 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.jem.org.tw/content/pdf/Vol.9No.1/02.pdf (application/pdf)
http://www.jem.org.tw/content/abstract/Vol.9No.1/English/02.htm (text/html)

Related works:
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:jec:journl:v:9:y:2013:i:1:p:13-30

Access Statistics for this article

Journal of Economics and Management is currently edited by Cathy W. S. Chen and Shih-Wen Hu

More articles in Journal of Economics and Management from College of Business, Feng Chia University, Taiwan Contact information at EDIRC.
Bibliographic data for series maintained by Yi-Ju Su ().