Verifiability in Markets for Credence Goods

Theory predicts that efficiency prevails on credence goods markets if customers are able to verify which quality they receive from an expert seller. In a series of experiments with endogenous prices we observe that variability fails to result in efficient provision behavior and leads to very similar results as a setting without variability. Some sellers always provide appropriate treatment even if own money maximization calls for over- or undertreatment. Overall our endogenous price-results suggests that both inequality aversion and a taste for efficiency play an important role for experts provision behavior. We contrast the implications of those two motivations theoretically and discriminate between them empirically using a �xed-price design. We then classify experimental experts according to their provision behavior.