Optimal procurement of a credence good under limited liability:
This paper analyzes the optimal contract for a consumer to procure a credence good from an expert when (i) the expert might misrepresent his private information about the consumer’s need, (ii) the expert might not choose the requested service since his choice of treatment is non-observable, and (iii...
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| Main Authors: | , |
|---|---|
| Format: | Electronic eBook |
| Language: | English |
| Published: |
Berlin
Freie Universität Berlin
September 2017
|
| Series: | Discussion paper / Freie Universität Berlin, School of Business & Economics Economics
2018, 1 |
| Subjects: | |
| Online Access: | Volltext |
| Summary: | This paper analyzes the optimal contract for a consumer to procure a credence good from an expert when (i) the expert might misrepresent his private information about the consumer’s need, (ii) the expert might not choose the requested service since his choice of treatment is non-observable, and (iii) limited liability of the expert precludes imposing penalty payments on him. We characterize payments under the optimal contract and show that, compared with the first-best, these induce inefficient undertreatment. We further show that separating diagnosis and treatment increases consumer surplus. Whether it decreases or increases the likelihood of undertreatment, however, depends on the accuracy of the expert's information |
| Physical Description: | 1 Online-Ressource (35 Seiten) |
Staff View
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| id | DE-604.BV044728140 |
| illustrated | Not Illustrated |
| indexdate | 2024-07-10T08:00:32Z |
| institution | BVB |
| language | English |
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| physical | 1 Online-Ressource (35 Seiten) |
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| publishDate | 2017 |
| publishDateSearch | 2017 |
| publishDateSort | 2017 |
| publisher | Freie Universität Berlin |
| record_format | marc |
| series2 | Discussion paper / Freie Universität Berlin, School of Business & Economics Economics |
| spelling | Bester, Helmut 1953- (DE-588)110706587 aut Optimal procurement of a credence good under limited liability Helmut Bester and Ouyang Yaofu Berlin Freie Universität Berlin September 2017 1 Online-Ressource (35 Seiten) txt rdacontent c rdamedia cr rdacarrier Discussion paper / Freie Universität Berlin, School of Business & Economics 2018, 1 Economics This paper analyzes the optimal contract for a consumer to procure a credence good from an expert when (i) the expert might misrepresent his private information about the consumer’s need, (ii) the expert might not choose the requested service since his choice of treatment is non-observable, and (iii) limited liability of the expert precludes imposing penalty payments on him. We characterize payments under the optimal contract and show that, compared with the first-best, these induce inefficient undertreatment. We further show that separating diagnosis and treatment increases consumer surplus. Whether it decreases or increases the likelihood of undertreatment, however, depends on the accuracy of the expert's information credence goods non-observable treatments hidden information moral hazard limited liability Haftungsbeschränkung (DE-588)4022901-4 gnd rswk-swf Vertrauensgut (DE-588)4792793-8 gnd rswk-swf Vertrag (DE-588)4063270-2 gnd rswk-swf Gewissensfreiheit (DE-588)4132798-6 gnd rswk-swf Vertrauensgut (DE-588)4792793-8 s Vertrag (DE-588)4063270-2 s Gewissensfreiheit (DE-588)4132798-6 s Haftungsbeschränkung (DE-588)4022901-4 s DE-188 Ouyang, Yaofu (DE-588)1175470465 aut Freie Universität Berlin, School of Business & Economics Discussion paper 2018, 1 : Economics (DE-604)BV026641400 2018,1 https://refubium.fu-berlin.de/handle/fub188/22025 Resolving-System kostenfrei Volltext |
| spellingShingle | Bester, Helmut 1953- Ouyang, Yaofu Optimal procurement of a credence good under limited liability credence goods non-observable treatments hidden information moral hazard limited liability Haftungsbeschränkung (DE-588)4022901-4 gnd Vertrauensgut (DE-588)4792793-8 gnd Vertrag (DE-588)4063270-2 gnd Gewissensfreiheit (DE-588)4132798-6 gnd |
| subject_GND | (DE-588)4022901-4 (DE-588)4792793-8 (DE-588)4063270-2 (DE-588)4132798-6 |
| title | Optimal procurement of a credence good under limited liability |
| title_auth | Optimal procurement of a credence good under limited liability |
| title_exact_search | Optimal procurement of a credence good under limited liability |
| title_full | Optimal procurement of a credence good under limited liability Helmut Bester and Ouyang Yaofu |
| title_fullStr | Optimal procurement of a credence good under limited liability Helmut Bester and Ouyang Yaofu |
| title_full_unstemmed | Optimal procurement of a credence good under limited liability Helmut Bester and Ouyang Yaofu |
| title_short | Optimal procurement of a credence good under limited liability |
| title_sort | optimal procurement of a credence good under limited liability |
| topic | credence goods non-observable treatments hidden information moral hazard limited liability Haftungsbeschränkung (DE-588)4022901-4 gnd Vertrauensgut (DE-588)4792793-8 gnd Vertrag (DE-588)4063270-2 gnd Gewissensfreiheit (DE-588)4132798-6 gnd |
| topic_facet | credence goods non-observable treatments hidden information moral hazard limited liability Haftungsbeschränkung Vertrauensgut Vertrag Gewissensfreiheit |
| url | https://refubium.fu-berlin.de/handle/fub188/22025 |
| volume_link | (DE-604)BV026641400 |
| work_keys_str_mv | AT besterhelmut optimalprocurementofacredencegoodunderlimitedliability AT ouyangyaofu optimalprocurementofacredencegoodunderlimitedliability |