Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/121788
Authors: 
Benner, Dietrich
Year of Publication: 
2004
Series/Report no.: 
Hohenheimer Agrarökonomische Arbeitsberichte 9
Abstract: 
With credence goods consumers cannot judge actual quality neither before purchase - ex ante - nor after purchase - ex post -. Trust has to replace own examination and verification. Applying Choquet-Expected Utility theory, a general model of credence goods is developed which takes the problem of trust explicitly in its view and generalizes the problem of quality uncertainty on the ?market for lemons? of Akerlof (1970) to ?quality ambiguity? with credence goods. The model shows the market mechanism only performing well in providing credence goods when consumers? trust in given information is not too low. With trust too low, sellers of credence goods will be driven out of the market by trust induced adverse selection. In market equilibrium prices will always be lower compared to equilibrium prices for experience goods.
Subjects: 
credence goods
asymmetric information
quality ambiguity
uality uncertainty
adverse selection
ambiguity
choquet expected utility
Choquet-Erwartungsnutzentheorie
JEL: 
C72
D81
D82
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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