Uwe Dulleck

Who they are

Dulleck works on information asymmetry and market design.

The 2006 review in the Journal of Economic Literature, titled for doctors, mechanics and computer specialists, set out why these markets fail in specific ways: undertreatment, overtreatment, overcharging, and in the worst case no functioning market.

The 2011 experiment, with Kerschbamer and Matthias Sutter in the American Economic Review, is the part this site relies on. Liability had a crucial effect. Verifiability had at best a minor one, which the theory had not predicted. Reputation had little influence, which it had. And competition drove prices down and produced maximal trade while not raising efficiency, as long as liability was violated.

Key papers

Dulleck, U., & Kerschbamer, R. (2006). "On doctors, mechanics, and computer specialists: the economics of credence goods." Journal of Economic Literature. First author.

Dulleck, U., Kerschbamer, R., & Sutter, M. (2011). "The economics of credence goods: an experiment on the role of liability, verifiability, reputation, and competition." American Economic Review, 101(2), 526-555. First author. 936 participants.

Key ideas

Liability beats verifiability, which reorders consumer advice: a guarantee is worth more than an itemised invoice. See Credence Goods.

Competition is not a remedy here. Cheaper and busier is not the same as better at delivering the right treatment.

Scope: a designed experiment in a modelled market, with no estimate of how often these failures occur in real trades.

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