Reveal It or Conceal It: On the Value of Second Opinions in a Low-Entry-Barriers Credence Goods Market

16 Pages Posted: 19 May 2020

See all articles by Parampreet Christopher Bindra

Parampreet Christopher Bindra

University of Innsbruck

Rudolf Kerschbamer

University of Innsbruck; Centre for Economic Policy Research (CEPR)

Daniel Neururer

University of Innsbruck

Matthias Sutter

Max Planck Institute for Research on Collective Goods

Date Written: May 2020

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.

Keywords: C93, D82

JEL Classification: Credence goods, expert services, second opinions, natural field experiment

Suggested Citation

Bindra, Parampreet Christopher and Kerschbamer, Rudolf and Neururer, Daniel and Sutter, Matthias, Reveal It or Conceal It: On the Value of Second Opinions in a Low-Entry-Barriers Credence Goods Market (May 2020). MPI Collective Goods Discussion Paper, No. 2020/11, Available at SSRN: https://ssrn.com/abstract=3604912 or http://dx.doi.org/10.2139/ssrn.3604912

Parampreet Christopher Bindra

University of Innsbruck ( email )

Universitätsstraße 15
Innsbruck, Innsbruck 6020
Austria

Rudolf Kerschbamer

University of Innsbruck ( email )

Universitaetsstrasse 15
Innsbruck, A - 6020
Austria
+43 512 507 7400 (Phone)
+43 512 507 2980 (Fax)

HOME PAGE: http://www.uibk.ac.at/c/c4/c409/staff/

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Daniel Neururer

University of Innsbruck ( email )

Universitätsstraße 15
Innsbruck, 6020
Austria

Matthias Sutter (Contact Author)

Max Planck Institute for Research on Collective Goods ( email )

Kurt-Schumacher-Str. 10
D-53113 Bonn, 53113
Germany

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