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Reveal it or conceal it: On the value of second opinions in a low-entry-barriers credence goods market

Author

Listed:
  • Parampreet Christopher Bindra

    (Department of Economics, University of Innsbruck)

  • Rudolf Kerschbamer

    (Department of Economics, University of Innsbruck)

  • Daniel Neururer

    (Department of Economics, University of Innsbruck)

  • Matthias Sutter

    (Max Planck Institute for Research into Collective Goods, Bonn)

Abstract

Credence goods markets with their asymmetric information between buyers and sellers are prone to large inefficiencies. In theory, poorly informed consumers can protect themselves from maltreatment through sellers by asking for second opinions from other sellers. Yet, empirical evidence whether this is a successful strategy is scarce. Here we present a natural field experiment in the market for computer repairs. We find that revealing a second opinion from another expert to the seller does neither increase the rate of successful repairs nor decrease the average repair price. We assess under which conditions gathering a second opinion can be valuable.

Suggested Citation

  • Parampreet Christopher Bindra & Rudolf Kerschbamer & Daniel Neururer & Matthias Sutter, 2020. "Reveal it or conceal it: On the value of second opinions in a low-entry-barriers credence goods market," ECONtribute Discussion Papers Series 004, University of Bonn and University of Cologne, Germany.
    • Handle: RePEc:ajk:ajkdps:004
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    References listed on IDEAS

    as
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    2. Balafoutas, Loukas & Kerschbamer, Rudolf, 2020. "Credence goods in the literature: What the past fifteen years have taught us about fraud, incentives, and the role of institutions," Journal of Behavioral and Experimental Finance, Elsevier, vol. 26(C).
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    Cited by:

    1. Schneider, Tim & Meub, Lukas & Bizer, Kilian, 2021. "Consumer information in a market for expert services: Experimental evidence," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 94(C).

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    More about this item

    Keywords

    Credence goods; expert services; second opinions; natural 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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