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Credence goods markets, online information and repair prices: A natural field experiment

Author

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  • Kerschbamer, Rudolf
  • Neururer, Daniel
  • Sutter, Matthias

Abstract

Credence goods markets are characterized by large informational asymmetries between consumers and expert sellers. In two waves of a natural field experiment in the market for computer repairs we study whether consumers benefit from accessing online information about their needs or previous consumers’ experience with particular sellers. We find that gaining noisy knowledge about one’s needs and revealing it to the seller is a costly mistake, since seemingly better informed customers pay, on average, higher prices. By contrast, accessing online ratings helps identifying sellers who provide appropriate quality at reasonable prices, in particular on rating platforms that filter out untrustworthy reviews.

Suggested Citation

  • Kerschbamer, Rudolf & Neururer, Daniel & Sutter, Matthias, 2023. "Credence goods markets, online information and repair prices: A natural field experiment," Journal of Public Economics, Elsevier, vol. 222(C).
    • Handle: RePEc:eee:pubeco:v:222:y:2023:i:c:s0047272723000737
    DOI: 10.1016/j.jpubeco.2023.104891
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    Cited by:

    1. Balafoutas, Loukas & Fornwagner, Helena & Kerschbamer, Rudolf & Sutter, Matthias & Tverdostup, Maryna, 2020. "Diagnostic Uncertainty and Insurance Coverage in Credence Goods Markets," IZA Discussion Papers 13848, Institute of Labor Economics (IZA).
    2. Loukas Balafoutas & Helena Fornwagner & Rudolf Kerschbamer & Matthias Sutter & Maryna Tverdostup, 2023. "Serving Consumers in an Uncertain World: A Credence Goods Experiment," ECONtribute Discussion Papers Series 258, University of Bonn and University of Cologne, Germany.

    More about this item

    Keywords

    Credence goods; Fraud; Online information; Rating platforms; Field experiment;
    All these keywords.

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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