TY  - RPRT
        AU  - Dulleck, Uwe
AU  - Kerschbamer, Rudolf
AU  - Sutter, Matthias
        TI  - The Economics of Credence Goods: On the Role of Liability, Verifiability, Reputation and Competition
        PY  - 2009/Feb/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 4030
        UR  - https://www.iza.org/publications/dp4030
        AB  - Credence goods markets are characterized by asymmetric information between sellers and consumers that may give rise to inefficiencies, such as under- and overtreatment or market break-down. We study in a large experiment with 936 participants the determinants for efficiency in credence goods markets. While theory predicts that either liability or verifiability yields efficiency, we find that liability has a crucial, but verifiability only a minor effect. Allowing sellers to build up reputation has little influence, as predicted. Seller competition drives down prices and yields maximal trade, but does not lead to higher efficiency as long as liability is violated.
        KW  - credence goods
KW  - experiment
KW  - liability
KW  - verifiability
KW  - reputation
KW  - competition
        ER  -