Working Paper: NBER ID: w18608
Authors: Jennifer Brown; Dylan B. Minor
Abstract: We examine misconduct in credence good markets with price taking experts. We propose a market-level model in which price-taking experts extract surplus based on the value of their firm's brand and their own skill. We test the predictions of the model using sales complaint data for exclusive and independent insurance agents. We find that exclusive insurance agents working for large branded firms are more likely to be the subject of a justified sales complaint, relative to independent experts, despite doing substantially less business. In addition, more experienced experts attract more complaints per year.
Keywords: credence goods; misconduct; insurance agents; organizational form; expert experience
JEL Codes: D8; G2; L15; M5
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Organizational form (exclusive agents) (L85) | rate of justified complaints (L15) |
| Expert experience (C90) | number of complaints (L96) |