Misconduct in Credence Good Markets

32 Pages Posted: 7 Dec 2012

See all articles by Jennifer Brown

Jennifer Brown

University of Utah - Department of Finance

Dylan Minor

Anderson School of Management (UCLA)

Date Written: December 2012

Abstract

We examine misconduct in credence good markets with price taking experts. We propose a market-level model in which price-taking experts extract surplus based on the value of their firm's brand and their own skill. We test the predictions of the model using sales complaint data for exclusive and independent insurance agents. We find that exclusive insurance agents working for large branded firms are more likely to be the subject of a justified sales complaint, relative to independent experts, despite doing substantially less business. In addition, more experienced experts attract more complaints per year.

Suggested Citation

Brown, Jennifer and Minor, Dylan, Misconduct in Credence Good Markets (December 2012). NBER Working Paper No. w18608. Available at SSRN: https://ssrn.com/abstract=2186336

Jennifer Brown (Contact Author)

University of Utah - Department of Finance ( email )

David Eccles School of Business
Salt Lake City, UT 84112
United States

Dylan Minor

Anderson School of Management (UCLA) ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

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