Payment scheme self-selection in the credence goods market: An experimental study

Hernán Bejarano, Ellen Green, Stephen Rassenti

Research output: Contribution to journalArticle

2 Citations (Scopus)

Abstract

Given heterogeneity in expert behavior across payment schemes in credence goods markets, it is important to understand the consequences of payment scheme selection on market outcomes. To study the effect that expert payment selection has on customer well-being, we recruited subjects to participate in a real-effort credence goods laboratory game. Experts were either randomly assigned or faced with the choice of three payment schemes: fee-for-service, salary, and capitation. We found that when experts selected fee-for-service payment customers experience significantly worse outcomes than when experts were randomly assigned to fee-for-service. In contrast, whether experts selected or were randomly assigned to salary payment, customer outcomes did not change.

Original languageEnglish (US)
Pages (from-to)396-403
Number of pages8
JournalJournal of Economic Behavior and Organization
Volume142
DOIs
StatePublished - Oct 1 2017

Fingerprint

Payment
Self-selection
Experimental study
Fees
Salary
Well-being
Customer experience
Capitation

Keywords

  • Capitation
  • Credence goods
  • Fee-for-service
  • Payment
  • Self-selection
  • Sorting

ASJC Scopus subject areas

  • Economics and Econometrics
  • Organizational Behavior and Human Resource Management

Cite this

Payment scheme self-selection in the credence goods market : An experimental study. / Bejarano, Hernán; Green, Ellen; Rassenti, Stephen.

In: Journal of Economic Behavior and Organization, Vol. 142, 01.10.2017, p. 396-403.

Research output: Contribution to journalArticle

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