Serving consumers in an uncertain world: A credence goods experiment

Loukas Balafoutas, Helena Fornwagner (), Rudolf Kerschbamer, Matthias Sutter and Maryna Tverdostup ()

Working Papers from Faculty of Economics and Statistics, Universität Innsbruck

Abstract: Credence goods markets are prone to fraudulent behavior and market inefficiencies due to informational asymmetries between sellers and customers. We examine experimentally the effects of diagnostic uncertainty and insurance coverage on the information acquisition and provision decisions by sellers and the trading decisions by consumers. Our results reveal that diagnostic uncertainty is a major source of inefficiency by decreasing efficient service provision. Insurance coverage has a positive net effect on market efficiency, despite making information acquisition and efficient service provision less likely. We also examine the role of -s and of sellers’ prosociality in shaping service provision and information acquisition.

Keywords: Credence goods; diagnostic uncertainty; insurance coverage; experiment (search for similar items in EconPapers)
JEL-codes: C91 D82 G22 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-com and nep-exp
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www2.uibk.ac.at/downloads/c9821000/wpaper/2023-15.pdf (application/pdf)

Related works:
Working Paper: Serving Consumers in an Uncertain World: A Credence Goods Experiment (2023)
Working Paper: Serving consumers in an uncertain world: A credence goods experiment (2023)
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:inn:wpaper:2023-15

Access Statistics for this paper

More papers in Working Papers from Faculty of Economics and Statistics, Universität Innsbruck Contact information at EDIRC.
Bibliographic data for series maintained by Judith Courian ( this e-mail address is bad, please contact ).