Séminaire COURNOT – Thomas Lanzi (Université de Lorraine)

Détails de l'événement :

« Credence Goods and Consumer Feedback » coécrit avec Mehdi Ayouni.

Résumé :

We analyze the effects of consumer feedback on a credence goods market.

We present a model where consumers sequentially visit a monopolistic expert. Each consumer faces a problem which can be either minor or major. The expert performs a diagnosis that can reveal information about the severity of the problem faced by each consumer. He then implements a treatment which can solve the problem or not. After visiting the expert, each consumer reveals the received treatment and its outcome, i.e.

whether it solved her problem. Each consumer receives the feedback from all previous consumers and uses it to update her belief on the ability of the expert to perform an informative diagnosis. She then decides whether to visit the expert. We show that consumer feedback can lead to inefficiency. More precisely, when the diagnosis fails, inefficiency appears when the expert overtreats the consumer whereas the probability of a major problem is sufficiently low. This effect does not occur without consumer feedback.