Credence goods, experts and risk aversion

Olivier Bonroy, Stéphane Lemarié () and Jean-Philippe Tropeano
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Stéphane Lemarié: GAEL - Laboratoire d'Economie Appliquée = Grenoble Applied Economics Laboratory - UPMF - Université Pierre Mendès France - Grenoble 2 - INRA - Institut National de la Recherche Agronomique

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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)
Date: 2013-09
Note: View the original document on HAL open archive server: https://hal.science/hal-00976890v1
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Citations: View citations in EconPapers (17)

Published in Economics Letters, 2013, 120 (3), pp.464-467. ⟨10.1016/j.econlet.2013.05.033⟩

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Related works:
Journal Article: 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:hal:pseptp:hal-00976890

DOI: 10.1016/j.econlet.2013.05.033

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