IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/122509.html
   My bibliography  Save this paper

Search and competition in expert markets

Author

Listed:
  • Cao, Yiran
  • Chen, Yongmin
  • Ding, Yucheng
  • Zhang, Tianle

Abstract

We analyze a model where consumers sequentially search experts for treatment recommendations and prices, facing either zero or a positive search cost, while experts simultaneously compete in these two dimensions. In equilibrium, experts may “cheat” by overstating the severity of a consumer’s problem and recommending an unnecessary treatment, prices follow distributions depending on the problem type and the treatment, and consumers employ Bayesian belief updating about their problem types during search. Paradoxically, as search cost decreases, expert cheating and prices can both increase stochastically. However, if search cost is sufficiently small, competition will force all experts to behave honestly.

Suggested Citation

  • Cao, Yiran & Chen, Yongmin & Ding, Yucheng & Zhang, Tianle, 2022. "Search and competition in expert markets," MPRA Paper 122509, University Library of Munich, Germany, revised 27 Oct 2024.
    • Handle: RePEc:pra:mprapa:122509
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/122509/1/MPRA_paper_122509.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    search; experts; competition; credence good;
    All these keywords.

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:122509. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.