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On Doctors, Mechanics, and Computer Specialists: The Economics of Credence Goods

Author

Listed:
  • Uwe Dulleck
  • Rudolf Kerschbamer

Abstract

Most of us need the services of an expert when our apartment's heating or our washing machine breaks down, or when our car starts to make strange noises. And for most of us, commissioning an expert to solve the problem causes concern. This concern does not disappear even after repair and payment of the bill. On the contrary, one worries about paying for a service that was not provided or receiving some unnecessary treatment. This article studies the economics underlying these worries. Under which conditions do experts have an incentive to exploit the informational problems associated with markets for diagnosis and treatment? What types of fraud exist? What are the methods and institutions for dealing with these informational problems? Under which conditions does the market provide incentives to deter fraudulent behavior? And what happens if all or some of those conditions are violated?

Suggested Citation

  • Uwe Dulleck & Rudolf Kerschbamer, 2006. "On Doctors, Mechanics, and Computer Specialists: The Economics of Credence Goods," Journal of Economic Literature, American Economic Association, vol. 44(1), pages 5-42, March.
    • Handle: RePEc:aea:jeclit:v:44:y:2006:i:1:p:5-42
    DOI: 10.1257/002205106776162717
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    Citations

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    Cited by:

    1. L. A. Esposito & A. Melcarne & Giovanni Battista Ramello & R. Zanola, 2025. "Supply-induced demand: insights from tax litigation," European Journal of Law and Economics, Springer, vol. 59(2), pages 257-276, April.
    2. Daniel Rehsmann & Béatrice Roussillon & Paul Schweinzer, 2023. "Contesting Fake News," CESifo Working Paper Series 10632, CESifo.
    3. Carolina Guerini & Donato Masciandaro & Alessia Papini, 2025. "Literacy and Financial Education: Private Providers, Public Certification and Political Preferences," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 11(2), pages 463-514, July.
    4. Maxime Perodaud & Michela Chessa, 2026. "Hey, what did you expect ? Confirmation bias in credence goods markets: Theoretical and experimental analyses," Post-Print hal-05441370, HAL.
    5. Limor Hatsor & Artyom Jelnov, 2025. "The more the merrier? Disciplinary actions against malpractice," Review of Economic Design, Springer;Society for Economic Design, vol. 29(2), pages 313-333, June.
    6. Christmann, Robin & Rösch, Jürgen, 2025. "Platforms, information asymmetry and leakage: why disintermediation may not hurt (so much) after all," MPRA Paper 126803, University Library of Munich, Germany.
    7. Si, Yafei & Chen, Gang & Zhou, Zhongliang & Yip, Winnie & Chen, Xi, 2025. "The impact of physician-patient gender match on healthcare quality: An experiment in China," Social Science & Medicine, Elsevier, vol. 380(C).
    8. Alessandro Fedele & Mirco Tonin & Daniel Wiesen, 2025. "Self-Selection Into Health Professions," CESifo Working Paper Series 11918, CESifo.
    9. Jeannette Brosig-Koch & Mona Groß & Heike Hennig-Schmidt & Nadja Kairies-Schwarz & Daniel Wiesen, 2025. "Physicians’ incentives, patients’ characteristics, and quality of care: a systematic experimental comparison of performance-pay systems," International Journal of Health Economics and Management, Springer, vol. 25(2), pages 217-243, June.
    10. Bastian Henze & Florian Schuett & Jasper P. Sluijs, 2015. "Transparency In Markets For Experience Goods: Experimental Evidence," Economic Inquiry, Western Economic Association International, vol. 53(1), pages 640-659, January.
    11. Figueroa, Nicolás & Guadalupi, Carla, 2025. "Procuring drugs while regulating the private market," Economics Letters, Elsevier, vol. 250(C).
    12. Winand Emons & Severin Lenhard, 2025. "The Economics of Advice," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 67(2), pages 111-131, August.
    13. Merkel, Lena & Bocoum, Fadima & Hartwig, Renate, 2025. "Pricing certainty: Experimental evidence on consumer trade-offs between drug quality and cost," Ruhr Economic Papers 1181, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    14. Powell-Jackson, Timothy & King, Jessica J.C. & Makungu, Christina & Goodman, Catherine, 2025. "Healthy competition? Market structure and the quality of clinical care given to standardised patients in Tanzania," Social Science & Medicine, Elsevier, vol. 373(C).

    More about this item

    JEL classification:

    • 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

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