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Thursday, March 26, 2015

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DR@W Forum: Matthias Sutter (University of Innsbruck)
糖心TV Library (Wolfson Research Exchange Area- Room 1)

Forensic economics: How customers’ insurance coverage induces sellers’ fraud in markets for credence goods

In markets for credence goods experts are better informed about the appropriate quality than their customers. Moreover, consumers are often unable to observe the quality they actually received. This leaves scope for misbehavior of the expert.

This paper reports on a natural field experiment in the Austrian market for computer repair services set up to measure the impact of informing the service provider that an insurance company will pay the repair bill on the extent and type of fraud. In the control the average repair price is about 70 € versus about 129 € when the service provider is informed that an insurance will cover the cost.

Decomposing the treatment effect into different types of fraud we find that the difference in repair prices is mainly due to overprovision (replacing more parts than necessary) and to overcharging in the working time dimension (charging for more working time than actually provided).

More information | Tags: Draw Forum |

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