Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/283396 
Year of Publication: 
2023
Series/Report no.: 
Working Papers in Economics and Statistics No. 2023-14
Publisher: 
University of Innsbruck, Research Platform Empirical and Experimental Economics (eeecon), Innsbruck
Abstract: 
In markets for credence goods - such as health care or repair services - fraudulent behavior by better informed experts is a common problem. Our model studies how four common features shape experts' provision behavior in credence goods markets: (i) diagnostic uncertainty of experts; (ii) insurance coverage of consumers; (iii) malpractice payments for treatment failure; and (vi) consumer-regarding preferences of experts. Diagnostic imprecision unambiguously leads to less efficient provision. Insurance coverage and malpractice payments have an ambiguous effect on efficient provision. The impact of consumer-regarding preferences on efficiency is positive without insurance but ambiguous in the presence of insurance.
Subjects: 
Credence goods
diagnostic uncertainty
insurance coverage
social preferences
JEL: 
D82
G22
Document Type: 
Working Paper

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