Credence goods, experts and risk aversion

Olivier Bonroy, Stéphane Lemarié and Jean-Philippe Tropeano

Economics Letters, 2013, vol. 120, issue 3, 464-467

Abstract: The existing literature on credence goods and expert services has overlooked the importance of risk aversion. In this paper we extend a standard expert model of credence goods with verifiable service quality by considering risk-averse consumers. Our results show that the presence of risk aversion reduces the expert’s incentive to invest in diagnosis and may thus lead to consumers’ mistreatment.

Keywords: Credence goods; Expert services; Risk aversion (search for similar items in EconPapers)
JEL-codes: D82 L15 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Related works:
Working Paper: Credence goods, experts and risk aversion (2013)
Working Paper: Credence goods, experts and risk aversion (2013)
Working Paper: Credence goods, experts and risk aversion (2013)
Working Paper: Credence goods, experts and risk aversion (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:120:y:2013:i:3:p:464-467

DOI: 10.1016/j.econlet.2013.05.033

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