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Credence goods markets, distributional preferences and the role of institutions

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  • Dominik Erharter

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    Abstract

    We study credence goods markets where an expert not only cares for her own monetary payoff, but also for the monetary payoff of her customer. We show how an expert with heterogeneous distributional preferences responds to monetary incentives in the absence of institutions, under liability and/or verifiability and identify optimal contracts for an expert with distributional preferences in each of these settings.

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    File URL: http://eeecon.uibk.ac.at/wopec2/repec/inn/wpaper/2012-11.pdf
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    Bibliographic Info

    Paper provided by Faculty of Economics and Statistics, University of Innsbruck in its series Working Papers with number 2012-11.

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    Length: 39
    Date of creation: Jun 2012
    Date of revision:
    Handle: RePEc:inn:wpaper:2012-11

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    Postal: Universitätsstraße 15, A - 6020 Innsbruck
    Phone: 0512/507-7151
    Fax: 0512/507-2788
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    Web page: http://www.uibk.ac.at/fakultaeten/volkswirtschaft_und_statistik/index.html.en
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    Related research

    Keywords: other-regarding preferences; credence good; institution; contract theory; industrial organization;

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    References

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    Cited by:
    1. Dominik Erharter, 2013. "Screening Experts' Distributional Preferences," Working Papers 2013-27, Faculty of Economics and Statistics, University of Innsbruck.

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