Research

Publications

Health Services as Credence Goods: A Field Experiment (joint with F. Gottschalk and C. Waibel), forthcoming,

The Economic Journal.

Abstract: Information problems are a defining characteristic in health care markets. Despite their importance, there is little direct evidence of the impact of information problems between patients and physicians on the quality of treatment. Furthermore, the role of market characteristics such as competition intensity is not well understood. In this paper, we present the results from a field experiment in the market for dental care. A test patient who does not require treatment is sent to 180 dentists to receive treatment recommendations. In the experiment, we vary two factors: First, the extent of the information asymmetry between patient and dentist. Second, we vary the perceived socioeconomic status (SES) of the test patient. Furthermore, we collect data to construct several measures of short- and long-term demand and competition as well as dentist and practice characteristics. We find that the patient receives an over-treatment recommendation in more than every fourth visit. A low short-term demand, indicating excess capacities, leads to significantly more overtreatment recommendations. Physician density and their price level however do not have a significant effect on overtreatment. Furthermore, we observe significantly less overtreatment recommendations for the patient with higher compared to lower SES under standard information, indicating a complex role of socioeconomic status. More patient information however does not significantly affect overtreatment.

Voluntary Pooling of Genetic Risk: A Health Insurance Experiment (joint with J. Nemitz and C. Waibel), forthcoming, Journal of Economic Behavior and Organization.

SCOR-EGRIE Young Economist Best Paper Award, 2018

Contract Withdrawals and Equilibrium in Competitive Markets with Adverse Selection (joint with A. Wambach),

Economic Theory, 2019, 67, 875–907.

Endogenous Insolvency in the Rothschild-Stiglitz Model (joint with A. Wambach), Journal of Risk and Insurance, 2019, 86, 165-181.

Price Competition and Reputation in Credence Goods Markets: Experimental Evidence (joint with A. Rasch and C. Waibel), Games and Economic Behavior, 2016, 100, 337-352.

Young Economists' Essay Award, EARIE 2013

Second Opinions in Markets for Expert Services: Experimental Evidence (joint with A. Rasch and C. Waibel), Journal of Economic Behavior and Organization, 2016, 131 B, 106-125.

A Note on Uniqueness in Game-Theoretic Foundations of the Reactive Equilibrium (joint with A. Wambach), Economics Letters, 2016, 141, 39-43.

New Developments in the Theory of Adverse Selection in Competitive Insurance (joint with A. Wambach), The Geneva Risk and Insurance Review, 2014, 39, 136 -152.

Working Papers

(Non)exclusive Contracting under Adverse Selection: An Experiment (joint with C.Waibel),

Revise & Resubmit, American Economic Journal: Microeconomics

Abstract: The performance of markets with hidden information is of central importance in microeconomic theory. We present the results of a comprehensive experiment that distinguishes between the two fundamental forms of hidden information, private and common values, in different contracting environments. Contracting environments vary in terms of the market power that the screening market side has over the trades of its privately informed customers, ranging from monopoly to nonexclusive competition. The degree of equilibrium play is striking, particularly in the complex cases of common values. Under private values, competition ensures efficient trades. Under common values, low-type buyers are to a large extent excluded under nonexclusive competition, whereas such types’ trades are only distorted under exclusive competition. This leads to a significantly higher market surplus under exclusive competition in comparison to nonexclusive competition under common values.

The Incentive Properties of Collective Reputation (joint with P. Fleckinger and A. Zago),

September 2019

Abstract: We build a model of collective reputation under moral hazard and analyze the incentive effects of different collective reputation structures. Heterogeneous producers need to exert effort to produce high quality. The demand side a priori does not observe the true quality, however high quality is detected as such by the market with some probability, reflecting e.g. expert inspections and awards. Products not detected

as of high quality are pooled together according to the collective reputation structure, i.e. grouping of producers. In the unique equilibrium, each group is subject to internal free-riding by their higher-cost members. We fi.nd that full collective reputation can yield higher quality and welfare than individual reputation, since inter-producer free-riding under full collective reputation might be less severe than intra-producer free-riding under individual reputations. However, full collective reputation is never optimal: A cut-off collective reputation structure with a small elite improves upon full collective reputation. Despite potentially higher producers' surplus (and welfare) under some collective reputation, any group with collective reputation unravels in absence of transfers. Nevertheless, we show that simple non-type-dependent internal contracts under collective reputation implement the First Best.

Excluding Ringleaders from Leniency Programs (joint with J. Herre and A. Rasch)

Revise and Resubmit, Journal of Economics & Management Strategy.

Work in Progress

The Streetlight Effect: Focusing on Unimportant Attributes (joint with K. Huesmann)

Incentives for Quality under Selective Monitoring: An Experiment (joint with P. Fleckinger and C. Waibel)

A Dollar Less for a Pound More: (Price) Discrimination and the Value of Privacy (joint with I. Gemmo and A. Sycheva)

Interdisciplinary

A Framework to Evaluate the Benefit of Seismic Upgrading, (joint with P. Galanis, A. Sycheva and B. Stojadinovic)

Earthquake Spectra, 2018.