credence goods, costly diagnosis, and subjective evaluation

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1、DiscussionPaperNo.483CredenceGoods,CostlyDiagnosisandSubjectiveEvaluationHelmutBester*MatthiasDahm***FreieUniversitätBerlin**UniversityofNottinghamNovember2014FinancialsupportfromtheDeutscheForschungsgemeinschaftthroughSFB/TR15isgratefullyacknowledged.Sonderforschu

2、ngsbereich/Transregio15·www.sfbtr15.deUniversitätMannheim·FreieUniversitätBerlin·Humboldt-UniversitätzuBerlin·Ludwig-Maximilians-UniversitätMünchenRheinischeFriedrich-Wilhelms-UniversitätBonn·ZentrumfürEuropäischeWirtschaftsforschungMannheimSpeaker:Prof.Dr.KlausM.S

3、chmidt·DepartmentofEconomics·UniversityofMunich·D-80539Munich,Phone:+49(89)21802250·Fax:+49(89)21803510CredenceGoods,CostlyDiagnosis,andSubjectiveEvaluation†‡HelmutBesterMatthiasDahmNovember4,2014AbstractWestudycontractingbetweenaconsumerandanexpert.Theexpertcanin

4、vestindiagnosistoobtainanoisysignalaboutwhetheralow–costserviceissufficientorwhetherahigh–costtreatmentisrequiredtosolvetheconsumer’sproblem.Thisinvolvesmoralhazardbecausediagnosiseffortandsignalsarenotobservable.Treat-mentsarecontractible,butsuccessorfailureofthelo

5、w–costtreatmentisobservedonlybytheconsumer.Paymentscanthereforenotdependontheobjectiveoutcomebutonlytheconsumer’sreport,orsubjectiveevaluation.Afailureofthelow–costtreatmentde-laysthesolutionoftheconsumer’sproblembythehigh–costtreatmenttoasecondperiod.Weshowthatthe

6、first–bestsolutioncanalwaysbeimplementediftheparties’discountrateiszero;anincreaseinthediscountratereducestherangeofparametercombinationsforwhichthefirst–bestcanbeobtained.Inanextensionweshowthatthefirst–bestisalsoalwaysimplementableifdiagnosisandtreatmentcanbeseparat

7、edbycontractingwithtwodifferentagents.Keywords:credencegoods,informationacquisition,moralhazard,subjectiveevalua-tionJELClassificationNo.:D82,D83,D86,I11,WethankVincentAnesi,AndreasAsseyer,GianniDeFraja,MatthiasLang,AlexPossajennikov,ElkeRen-ner,DanielSeidmann,Rola

8、ndStrausz,SilviaSonderegger,CeciliaTesta,JustinMattiasValasekandOriWeiselforhelpfuldiscussionsandsuggestions.Theusualdisclaimerapplies.HelmutBest