Document Type
Article
Publication Date
2016
Abstract
Given heterogeneity in expert behavior across payment schemes in credence goods markets, it becomes important to understand the consequences of payment scheme selection. To study the effect on customer well being of expert self-selection, we recruited subjects to participate in a real-effort credence good laboratory market. Experts were either randomly assigned or faced with the choice of three payment schemes: fee-for-service, salary, and capitation. We found that experts who selected fee-for-service payment resulted in customers with significantly worse outcomes in comparison with experts who had been randomly assigned to fee-for-service. In contrast, experts who selected salary payment did not change customer outcomes relative to those who were randomly assigned.
Recommended Citation
Bejerano, H., Green, E.P., & Rassenti, S. (2016). Payment scheme self-selection in the credence goods market: An experimental study. ESI Working Paper 16-04. Retrieved from http://digitalcommons.chapman.edu/esi_working_papers/182/
Comments
Working Paper 16-04
This working paper was later published as:
Bejarano, H., Green, E., & Rassenti, S. (2017). Payment scheme self-selection in the credence goods market: An experimental study. Journal of Economic Behavior & Organization, 142, 396-403. doi: 10.1016/j.jebo.2017.08.004