Credence goods: Moral wiggle room and contractual opportunism

We report the results of an experiment to investigate the influence of different settings in credence good markets on opportunism in sellers’ decisions. As predicted by our model based on behavioral information economics, we find that the choice of design features might be less innocuous than generally presumed: sellers’ decisions made under a direct sales regime are significantly more opportunistic than purchase recommendations. Furthermore, average choices are more opportunistic when a costless diagnosis is required to assess the buyer’s needs – sellers exploit moral wiggle room by avoiding information. Yet, this effect is only present for purchase recommendations, not direct sales. Both effects significantly affect market efficiency. While some of the observed effects tie into the literature on lying aversion, we find that a large part of our results is not consistent with additively separable costs of lying.