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

Alexander Rasch and Christian Waibel

No 180, DICE Discussion Papers from Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE)

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 a firm's 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)
Date: 2015
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Citations: View citations in EconPapers (4)

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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 (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:dicedp:180

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