Document Type
Article
Publication Date
8-26-2021
Abstract
We introduce two sources of uncertainty into credence-goods experiments: 1) diagnostic uncertainty; experts receive a noisy signal of buyer type; 2) service uncertainty; the services do not always work. Both make detection of dishonesty more difficult. In contrast to hypotheses, we find that uncertainty decreases dishonesty and increases trust; additionally, ratings do not improve efficiency of the transactions under uncertainty. Buyers tended to 'shoot the messenger' (give low ratings) when the high-need option does not work due to bad luck, and to give experts the 'benefit of the doubt' (high ratings) when the high-need option may have been intentionally overprovided.
Recommended Citation
Schniter, E., Tracy, J. D., & Zíka, V. (2021). Uncertainty and reputation effects in credence goods markets. ESI Working Paper 21-15. https://digitalcommons.chapman.edu/esi_working_papers/352/
Comments
ESI Working Paper 21-15