Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/58978 
Year of Publication: 
2012
Series/Report no.: 
IZA Discussion Papers No. 6491
Publisher: 
Institute for the Study of Labor (IZA), Bonn
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: 
Document Type: 
Working Paper

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