Referral network and consumer trust

Yuk-fai Fong, Tsz-him Lau, Xiaoxuan Meng and Lin Zhao

Economics Letters, 2025, vol. 247, issue C

Abstract: This paper studies repeated interactions between experts and consumers to explore how referral networks, where experts refer consumers to those with the appropriate areas of expertise within the network, promote trust and honesty. When consumers’ searches for second opinions are directed by referrals, they visit fewer experts before their problems are fixed. This results in experts meeting fewer consumers each period, limiting their opportunities to exploit consumers, thereby promoting truth-telling.

Keywords: Credence goods; Referral network; Trust building; Expert honesty (search for similar items in EconPapers)
JEL-codes: D4 D82 D83 D85 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:247:y:2025:i:c:s0165176524006177

DOI: 10.1016/j.econlet.2024.112133

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