Searching for Treatment

Martin Obradovits () and Philipp Plaickner

Journal of Institutional and Theoretical Economics (JITE), 2024, vol. 180, issue 1, 144-186

Abstract: n markets for expert credence goods such as medical treatments and technical repairs, overtreatment is a common problem. However, when experts are free to choose treatment prices, this behavior is difficult to rationalize. We explain overtreatment in a model where consumers can seek treatment from an informed, liable expert or purchase speculative minor treatments from fringe firms, with costly search. Next to overtreatment, we show that wasteful search and the purchase of ineffective treatments may occur in equilibrium. Welfare is non-monotonic in search costs and can even be maximal when these are large. Expert competition may not mitigate market distortions.

Keywords: expertservices; credencegoods; overtreatment; search; repair; expert services; credence goods (search for similar items in EconPapers)
JEL-codes: D43 D82 D83 L13 L15 (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.mohrsiebeck.com/en/article/searching-f ... 101628jite-2023-0031
Fulltext access is included for subscribers to the printed version.

Related works:
Working Paper: Searching for Treatment (2020)
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:mhr:jinste:urn:doi:10.1628/jite-2023-0031

Ordering information: This journal article can be ordered from
Mohr Siebeck GmbH & Co. KG, P.O.Box 2040, 72010 Tübingen, Germany

DOI: 10.1628/jite-2023-0031

Access Statistics for this article

Journal of Institutional and Theoretical Economics (JITE) is currently edited by Gerd Mühlheußer and Bayer, Ralph-C

More articles in Journal of Institutional and Theoretical Economics (JITE) from Mohr Siebeck, Tübingen
Bibliographic data for series maintained by Thomas Wolpert ().