Framing and subject pool effects in healthcare credence goods

Abstract

Credence goods markets are characterized by asymmetric information between experts and consumers, specifically relating to quality (what is needed and/or supplied). The functioning of the market is heavily reliant on trust on the side of the consumer and trustworthiness on the side of the expert. However, a large body of empirical and experimental research has demonstrated the existence of overtreatment, undertreatment, and overcharging in several credence goods markets. In this paper, we study two determinants of trust and trustworthiness in experimental credence goods markets: the effects of a health frame (vs. a neutral frame) and an expert subject pool (vs. standard student subject pool). Our results reveal that the subject pool, in combination with the health frame, has a significant impact on the level of trust and trustworthiness, shown by a higher willingness of consumers (patients) to enter the market and a lower rate of undertreatment by experts.