The Good, the Bad and the Naive: Do Fair Prices Signal Good Types or Do They Induce Good Behaviour?
David Johnston (),
Rudolf Kerschbamer () and
Matthias Sutter ()
No 6491, IZA Discussion Papers from Institute of Labor Economics (IZA)
Evidence on behavior of experts in credence goods markets raises an important causality issue: Do "fair prices" induce "good behavior", or do "good experts" post "fair prices"? To answer this question we propose and test a model with three seller types: "the good" choose fair prices and behave consumer-friendly; "the bad" mimic the good types' price-setting, but cheat on quality; and "the naive" fall victim to a projection bias that all sellers behave like the bad types. OLS, sample selection and fixed effects regressions support the model's predictions and show that causality goes from good experts to fair prices.
Keywords: credence goods; experts; pricing; experiment; other regarding preferences; signalling; projection bias (search for similar items in EconPapers)
JEL-codes: C91 L15 D82 D40 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe and nep-exp
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed
Downloads: (external link)
Working Paper: The good, the bad and the naive: Do fair prices signal good types or do they induce good behaviour? (2012)
Working Paper: The Good, the Bad and the Naive: Do fair prices signal good types or do they induce good behaviour? (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp6491
Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
Access Statistics for this paper
More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().