A Theory of Fraud and Overtreatment in Experts Markets
Abstract"Consumers often rely on an expert's diagnosis to assess their needs. If the expert is also the seller of services, he may use his informational advantage to induce overtreatment, which is a pervasive phenomenon in experts markets. We offer and discuss conditions leading to equilibrium overtreatment in an otherwise purely competitive model. This market failure results from consumers' ability to turn down an expert's recommendation: experts defraud consumers to keep them uninformed, as this deters them from seeking a better price elsewhere." Copyright 2006, The Author(s) Journal Compilation (c) 2006 Blackwell Publishing.
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal Journal of Economics & Management Strategy.
Volume (Year): 15 (2006)
Issue (Month): 4 (December)
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Web page: http://www.kellogg.northwestern.edu/research/journals/JEMS/
Other versions of this item:
- Alger, Ingela & Salanié, François, 2006. "A theory of fraud and overtreatment in experts markets," Open Access publications from University of Toulouse 1 Capitole http://neeo.univ-tlse1.fr, University of Toulouse 1 Capitole.
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- Liu, Ting, 2006.
"Credence Goods Markets with Conscientious and Selfish Experts,"
1106, University Library of Munich, Germany.
- Liu, Ting, 2006. "Credence Goods Markets with Conscientious and Selfish Experts," MPRA Paper 1107, University Library of Munich, Germany, revised 10 Sep 0007.
- Ting Liu, 2006. "Credence Goods Markets with Conscientious and Selfish Experts," Boston University - Department of Economics - Working Papers Series WP2006-058, Boston University - Department of Economics.
- Rudolf Kerschbamer & Matthias Sutter & Uwe Dulleck, 2009.
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- Alexander Frankel & Michael Schwarz, 2009. "Experts and Their Records," NBER Working Papers 14921, National Bureau of Economic Research, Inc.
- Dominik Erharter, 2012. "Credence goods markets, distributional preferences and the role of institutions," Working Papers 2012-11, Faculty of Economics and Statistics, University of Innsbruck.
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