What drives fraud in a credence goods market? Evidence from a field study
This paper investigates the impact of four key economic variables on an expert firm’s incentive to defraud its customers in a credence goods market: the level of competition, the expert firm’s financial situation, its competence, and its reputational concerns. We use and complement the dataset of a nationwide field study conducted by the German Automobile Association that regularly checks the reliability of garages in Germany. We find that more intense competition and high competence lower firms’ incentive to overcharge. A low concern for reputation and a critical financial situation increase the incentive to overcharge.
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- Balafoutas, Loukas & Beck, Adrian & Kerschbamer, Rudolf & Sutter, Matthias, 2011.
"What Drives Taxi Drivers? A Field Experiment on Fraud in a Market for Credence Goods,"
IZA Discussion Papers
5700, Institute for the Study of Labor (IZA).
- Loukas Balafoutas & Adrian Beck & Rudolf Kerschbamer & Matthias Sutter, 2013. "What Drives Taxi Drivers? A Field Experiment on Fraud in a Market for Credence Goods," Review of Economic Studies, Oxford University Press, vol. 80(3), pages 876-891.
- Loukas Balafoutas & Adrian Beck & Rudolf Kerschbamer & Matthias Sutter, 2011. "What drives taxi drivers? A field experiment on fraud in a market for credence goods," Working Papers 2011-11, Faculty of Economics and Statistics, University of Innsbruck.
- Loukas Balafoutas & Adrian Beck & Rudolf Kerschbamer & Matthias Sutter, 2011. "What Drives Taxi Drivers? A Field Experiment on Fraud in a Market for Credence Goods," CESifo Working Paper Series 3461, CESifo Group Munich.
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