Credence goods, experts and risk aversion
AbstractThe existing literature in expert-customer relationship concludes that when: i) consumers are homogenous, ii) consumers are committed with an an expert once this one made a recommendation, and iii) the type of treatment provided is verifiable, an expert finds optimal to serve efficiently his customers. This work shows that the previous result may not occur when consumers are not risk-neutral. Our result, that holds in a monopoly setting and under Bertrand competition, suggests that risk averse consumers have more likely to be mistreated by experts.
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Bibliographic InfoPaper provided by Grenoble Applied Economics Laboratory (GAEL) in its series Working Papers with number 201005.
Date of creation: 2010
Date of revision:
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CREDENCE GOODS; EXPERT SERVICES; RISK AVERSION;
Other versions of this item:
- D40 - Microeconomics - - Market Structure and Pricing - - - General
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-09-25 (All new papers)
- NEP-MKT-2010-09-25 (Marketing)
- NEP-UPT-2010-09-25 (Utility Models & Prospect Theory)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kai Sülzle & Achim Wambach, 2002.
"Insurance in a Market for Credence Goods,"
CESifo Working Paper Series
677, CESifo Group Munich.
- 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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