IDEAS home Printed from https://ideas.repec.org/a/mhr/jinste/urndoi10.1628-jite-2023-0033.html
   My bibliography  Save this article

Second Opinions and Diagnostic Uncertainty in Expert Markets

Author

Listed:
  • Florian Baumann
  • Alexander Rasch

Abstract

Second opinions are often proposed as a disciplining device to mitigate fraudulent behavior by experts. However, inappropriate treatment recommendations may stem from diagnostic uncertainty or inaccuracy. We analyze expert and customer behavior in a situation in which diagnostic outcomes can be incorrect, and in which customers can decide to seek a second opinion. We find that if diagnostic uncertainty pertains to the identification of the minor problem, an increase in diagnostic quality may be offset by a greater frequency of fraudulent recommendations for major treatments, while the degree to which customers search for second opinions remains unchanged. If not all major problems can be accurately identified, comparative statics is more intricate.

Suggested Citation

  • Florian Baumann & Alexander Rasch, 2024. "Second Opinions and Diagnostic Uncertainty in Expert Markets," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 180(1), pages 74-105.
    • Handle: RePEc:mhr:jinste:urn:doi:10.1628/jite-2023-0033
    DOI: 10.1628/jite-2023-0033
    as

    Download full text from publisher

    File URL: https://www.mohrsiebeck.com/en/article/second-opinions-and-diagnostic-uncertainty-in-expert-markets-101628jite-2023-0033
    Download Restriction: Fulltext access is included for subscribers to the printed version.
    File URL: https://libkey.io/10.1628/jite-2023-0033?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    credencegood; diagnosis; expert; fraud; overtreatment; credence good;
    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

    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:mhr:jinste:urn:doi:10.1628/jite-2023-0033. 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: Thomas Wolpert (email available below). General contact details of provider: https://www.mohrsiebeck.com/jite .

    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.