Second Opinions in Markets for Expert Services: Experimental Evidence

57 Pages Posted: 22 Feb 2014 Last revised: 27 Jul 2018

See all articles by Wanda Mimra

Wanda Mimra

Catholic University of Lille - IESEG School of Management

Alexander Rasch

University of Cologne

Christian Waibel

ETH Zürich - CER-ETH - Center of Economic Research at ETH Zurich

Date Written: March 09, 2016

Abstract

We experimentally investigate the role of second opinions in markets where experts such as physicians both diagnose and provide the services. Physicians may exploit their informational advantage and overtreat their patients by providing a more costly and expensive treatment than necessary. We show that introducing costly second opinions significantly reduces the level of overtreatment. Lowering search costs leads to significantly more second opinions, but the overtreatment level does not decrease. Under low but not under high search costs, market efficiency rises with the introduction of second opinions, as the reduction in treatment costs due to less overtreatment exceeds the increase in incurred search costs.

Keywords: Credence goods, Experts, Second opinion, Overtreatment, Search costs

JEL Classification: D82, L15

Suggested Citation

Mimra, Wanda and Rasch, Alexander and Waibel, Christian, Second Opinions in Markets for Expert Services: Experimental Evidence (March 09, 2016). Available at SSRN: https://ssrn.com/abstract=2398953 or http://dx.doi.org/10.2139/ssrn.2398953

Wanda Mimra (Contact Author)

Catholic University of Lille - IESEG School of Management ( email )

Socle de la Grande Arche
1 Parvis de la Defense
Puteaux, Paris 92800
France

Alexander Rasch

University of Cologne ( email )

Albertus-Magnus-Platz
Cologne, 50923
Germany

Christian Waibel

ETH Zürich - CER-ETH - Center of Economic Research at ETH Zurich ( email )

Zürichbergstrasse 18
Zurich, 8092
Switzerland

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