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Title:The good, the bad and the naive: Do fair prices signal good types or do they induce good behaviour? PDF Logo
Authors:Dulleck, Uwe
Johnston, David W.
Kerschbamer, Rudolf
Sutter, Matthias
Issue Date:2012
Series/Report no.:Discussion Paper series, Forschungsinstitut zur Zukunft der Arbeit 6491
Abstract: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.
Subjects:credence goods
experts
pricing
experiment
other regarding preferences
signalling
projection bias
JEL:C91
L15
D82
D40
Persistent Identifier of the first edition:urn:nbn:de:101:1-2012080812340
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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