Credence goods, experts and risk aversion
Résumé
The existing literature on credence goods and expert services has overlooked the importance of risk aversion. In this paper we extend a standard expert model of credence goods with verifiable service quality by considering risk-averse consumers. Our results show that the presence of risk aversion reduces the expert's incentive to invest in diagnosis and may thus lead to consumers' mistreatment.
Domaines
Economies et finances| Origine | Fichiers produits par l'(les) auteur(s) |
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