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Second opinions in markets for expert services: Experimental evidence

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  • Mimra, Wanda
  • Rasch, Alexander
  • Waibel, Christian

Abstract

We experimentally investigate the role of second opinions in markets where experts such as physicians both diagnose and provide the services. Physicians may exploit their informational advantage and overtreat their patients by providing a more costly and expensive treatment than necessary. We show that introducing costly second opinions significantly reduces the level of overtreatment. Lowering search costs leads to significantly more second opinions, but the overtreatment level does not decrease. Under low but not under high search costs, market efficiency rises with the introduction of second opinions, as the reduction in treatment costs due to less overtreatment exceeds the increase in incurred search costs.

Suggested Citation

  • Mimra, Wanda & Rasch, Alexander & Waibel, Christian, 2016. "Second opinions in markets for expert services: Experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 131(PB), pages 106-125.
    • Handle: RePEc:eee:jeborg:v:131:y:2016:i:pb:p:106-125
    DOI: 10.1016/j.jebo.2016.03.004
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    More about this item

    Keywords

    Overtreatment; Second opinion; Physician experts; Credence goods; Search costs;
    All these keywords.

    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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