What drives fraud in a credence goods market? Evidence from a field study

Alexander Rasch and Christian Waibel

No 13/179, CER-ETH Economics working paper series from CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich

Abstract: This paper investigates the impact of four key economic variables on an expert firm’s incentive to defraud its customers in a credence goods market: the level of competition, the expert firm’s financial situation, its competence, and its reputational concerns. We use and complement the dataset of a nationwide field study conducted by the German Automobile Association that regularly checks the reliability of garages in Germany. We find that more intense competition and high competence lower firms’ incentive to overcharge. A low concern for reputation and a critical financial situation increase the incentive to overcharge.

Keywords: Asymmetric information; Auto repair market; Credence goods; Expert; Fraud; Overcharging. (search for similar items in EconPapers)
JEL-codes: D82 L15 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2013-05
New Economics Papers: this item is included in nep-com, nep-cta, nep-eur and nep-hme
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Related works:
Journal Article: What Drives Fraud in a Credence Goods Market? – Evidence from a Field Study (2018)
Working Paper: What drives fraud in a credence goods market? Evidence from a field study (2015)
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