Mandate or delegate? the optimal contract for credence goods with the expert's endeavor

被引:0
作者
Wu, Cheng-Tai [3 ]
Tsai, Tsung-Sheng [1 ,2 ]
机构
[1] Fu Jen Catholic Univ, Taipei, Taiwan
[2] Natl Taiwan Univ, Taipei, Taiwan
[3] Fu Jen Catholic Univ, Dept Econ, 510 Zhongzheng Rd, New Taipei City 242062, Taiwan
关键词
Credence goods; Moral hazard; Delegation; Under-treatment; FIELD EXPERIMENT; AGENCY PROBLEMS; COMPETITION; MARKET; OVERTREATMENT; REPUTATION; ECONOMICS; INSURANCE; FRAUD;
D O I
10.1016/j.jebo.2024.106863
中图分类号
F [经济];
学科分类号
02 ;
摘要
We consider a market for credence goods where a consumer does not know her problem (either major or minor), and an expert can perform a treatment to fix the problem as well as make an effort to improve the effect of treatment. The consumer can offer a contract in which she mandates a specific treatment or a contract which she delegates to the expert who chooses the treatment and is also induced to reveal the consumer's type. We find that the delegation contract can be the best contract when the high-level treatment is moderately more efficient than the low-level treatment in fixing the minor problem. This is because the delegation contract leads to a more efficient effort decision which can compensate for the efficiency loss from insufficient treatment. Therefore, the consumer may prefer to be under-treated for the minor problem even though the high-level treatment should have been mandated if she had known her type.
引用
收藏
页数:23
相关论文
共 21 条