TI Complexity in Economics Seminars, CREED Seminars Amsterdam

Matthias Sutter (University of Cologne, Germany)
Wednesday, 23 November 2016

We present field experiments on the provision of credence goods and examine costly mistakes of customers when interacting with expert sellers. More precisely, we study how insurance coverage, perceived willingness to pay and inferior knowledge of customers can be exploited by expert sellers in the market for computer repairs. The effects are economically and statistically significant, increasing repair prices by up to 100%, depending on treatment. We are able to disentangle the sources of these price increases into overprovision and overcharging.