Car mechanics in the lab: investigating the behavior of real experts on experimental markets for credence goods

Adrian Beck, Rudolf Kerschbamer, Jianying Qiu and Matthias Sutter

No ECO2014/02, Economics Working Papers from European University Institute

Abstract: Credence goods, such as car repairs or medical services, are characterized by severe informational asymmetries between sellers and consumers, leading to fraud in the form of provision of insufficient service (undertreatment), provision of unnecessary service (overtreatment) and charging too much for a given service (overcharging). Recent experimental research involving a standard (student) subject pool has examined the influence of informational and market conditions on the type and level of fraud. We investigate whether professional car mechanics – as real sellers of credence goods – react in the same way to changes in informational and institutional constraints. While we find qualitatively similar effects in the fraud dimensions of undertreatment and overcharging for both subject pools, car mechanics are significantly more prone to supplying unnecessary services in all conditions, which could be a result of decision heuristics they learned in their professional training.

Keywords: Artefactual field experiment; car mechanics; credence goods (search for similar items in EconPapers)
JEL-codes: C72 C91 D82 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-tre
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (29)

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Related works:
Journal Article: Car mechanics in the lab––Investigating the behavior of real experts on experimental markets for credence goods (2014)
Working Paper: Car Mechanics in the Lab - Investigating the Behavior of Real Experts on Experimental Markets for Credence Goods (2014)
Working Paper: Car Mechanics in the Lab - Investigating the Behavior of Real Experts on Experimental Markets for Credence Goods (2009)
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