Matthis Sutter teaches on a PhD course

Marco Piovesan organizes a PhD course on Behavior and Incentives with Professor Matthias Sutter. Here is an abstract:

The Dos and Don’ts in Credence Goods Markets

Rudolf Kerschbamer, Daniel Neururer and Matthias Sutter

In this paper, we examine with the help of a natural field experiment how the extent and type of misbehavior in the market for computer repair services depend on features that are predicted to be crucial by theoretical considerations.

Specifically, we investigate whether the following interventions influence the behavior of the expert sellers: (i) asking the expert to contact the consumer if the cost of the repair exceeds a certain limit and (ii) telling the expert that the data on the broken computer is very important. Furthermore, we manipulate the computer expert’s perception about the customer’s (iii) knowledge about the problem and we examine also if (iv) there is a relationship between the internet reviews of the repair shops and the extent and type of misbehavior.

Overall, we find that about 32% of the visited computer shops charge for more work effort than would have been needed in case of a proper repair. Specifically, the average repair price increases by about 100% when (i) a price limit above the true value of the repair is stated; (ii) the customer states that the data on the broken computer is of high importance; and (iii) the customer states a rough but incorrect suspicion about the potential problem. Furthermore, it seems that potential misbehavior of computer shops can be anticipated to some degree by checking the internet reviews.

Matthias Sutter is a Director of the Experimental Economics Group at the Max Planck Institute for Research on Collective Goods in Bonn and Professor of Economics at the University of Cologne.

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