Credence goods, experts and risk aversion

The existing literature in expert-customer relationship concludes that when: i) consumers are homogenous, ii) consumers are committed with an an expert once this one made a recommendation, and iii) the type of treatment provided is verifiable, an expert finds optimal to serve efficiently his customers. This work shows that the previous result may not occur when consumers are not risk-neutral. Our result, that holds in a monopoly setting and under Bertrand competition, suggests that risk averse consumers have more likely to be mistreated by experts.CREDENCE GOODS;EXPERT SERVICES;RISK AVERSION

Expert systems and the emergence of teledesign

This paper considers the extent to which the amateur use of expert systems for home design challenges traditional views of the design process. The issues are examined in the context of competing definitions of design. The emergence of a design process characterised as ‘teledesign’ is then considered, wherein retailers provide a CAD/CAM service to consumers, allowing the latter to use expert systems to modify template designs and get products fabricated to their own specifications. Such a system may be seen to empower consumers as designers, rather than just selectors of products, and would differ considerably from established paradigms of design, manufacture and consumption, such as that given by Baudrillard

Price Discrimination in Markets for Experts´ Services

This article studies the consequences of price discrimination in a market for experts´services. In the case of experts markets, where the expert observers the intervention that a consumer needs to fix his problem and also provides a treatment, price discrimination proceeds along the dimension of quality of advice offered. High quality advice and appropriate treatment is providid to the most profitable market segment only. Less profitable consumers are induced to demand either unnecessary or insufficient procedures. The welfare consequences of price discrimination are ambiguous: On the one hand, price discrimination increases the number of consumers that get an intervention. On the other hand, sone consumers that are efficiently served under nondiscrimination get the wrong procedure if the expert can discriminate among customers.

Consumers and Experts: An Econometric Analysis of the Demand for Water Heaters

Consumers can accumulate product information on the basis of a combination of searching, product advertising and expert advice.Examples of experts who provide product information include doctors advising patients on treatments, motor mechanics diagnosing car problems and recommending repairs, accountants recommending investment strategies, and plumbers making recommendations on alternative water heaters.In each of these examples, the transactions involve the sale of goods and services where the seller is at the same time an expert providing advice on the amount and type of product or service to be purchased.In the case of water heaters, the plumber advising a consumer on their choice of water heater will most likely also install the appliance.Because of the information asymmetry there is potentially a strategic element in the transmission of information from expert to consumer.This paper reports on an econometric investigation of the factors that determine the choices made by consumers and the recommendations made by plumbers and the extent to which plumbers act in the best interests of their customers.The empirical work is made possible by the availability of stated preference data generated by designed experiments involving separate samples of Australian consumers and plumbers.We find some evidence that plumbers have higher preferences than consumers for heater characteristics that increase their profit margin.consumers;demand;product information;advertising;investment;econometrics

The use of indicators for unobservable product qualities: inferences based on consumer sorting

Using the dietary supplement black cohosh to demonstrate our method, we employ data on a product characteristic unobservable to consumers to decompose the contribution to consumers’ valuations of observable characteristics into surrogate indicator and direct components. Because consumers are not all “expert appraisers” of the unobservable characteristic, the measured relationship of indicators to the unobservable quality is generally not the one consumers perceive. Consequently, biases that depend upon the nature of consumers’ ineptitude are introduced into the component estimation. The researcher’s inference problem is solved by recognizing that consumers with greater appraisal expertise sort disproportionately to higher quality products. This enables feasible measurement of inept consumers’ relative valuations and conjectures through separate hedonic estimation on high- and low-quality product subsamples. We find that, relative to experts, inept consumers likely underestimate the value of most observable characteristics in indicating black cohosh product authenticity; however they overweight online product ratings.hedonic analysis; surrogate indicators; asymmetric information; pricing strategy; product strategy

Medical WordNet: A new methodology for the construction and validation of information resources for consumer health

A consumer health information system must be able to comprehend both expert and non-expert medical vocabulary and to map between the two. We describe an ongoing project to create a new lexical database called Medical WordNet (MWN), consisting of medically relevant terms used by and intelligible to non-expert subjects and supplemented by a corpus of natural-language sentences that is designed to provide medically validated contexts for MWN terms. The corpus derives primarily from online health information sources targeted to consumers, and involves two sub-corpora, called Medical FactNet (MFN) and Medical BeliefNet (MBN), respectively. The former consists of statements accredited as true on the basis of a rigorous process of validation, the latter of statements which non-experts believe to be true. We summarize the MWN / MFN / MBN project, and describe some of its applications

Brokerage Of Human Expertise: An Overview Of The Expert Websites On The Internet

Expert web sites, an online resource, provide a useful connection between knowledge seekers (i.e., the consumers of knowledge) and knowledge providers (i.e., experts).   Since 1998 there has been a proliferation of expert web sites.  As the phenomenon of expert web sites is still relatively new, there is very little research on the effectiveness of these services.  Thus it is difficult for consumers of this type of service to make informed choices.  This paper is an attempt to provide a general overview of the effectiveness of expert web sites.  We have presented a brief synthesis of the features of the most popular expert web sites along with a conceptual framework that clearly identifies the issues that must be examined in evaluating the effectiveness of the sites.  The framework is meant to generate some empirical research regarding the new phenomenon and the results of this empirical research could then assist consumers in making informed decisions regarding their choice of expert web sites to suit their needs

Consumer Preferences for Mass Customization

Increasingly, firms allow consumers to mass customize their products. In this study, the authors investigate consumers’ evaluations of different mass customization configurations when asked to mass customize a product. For instance, mass customization configurations may differ in the number of modules that may be mass customized. The authors find – in the context of mass customization of personal computers – that mass customization configuration affects the product utility consumers can achieve in mass customization as well as their perception of mass customization complexity. In turn, product utility and complexity affect the utility consumers derive from using a certain mass customization configuration. More specifically, product utility has a positive, and complexity has a negative effect on mass customization configuration utility. The effect of complexity is direct as well as indirect, because complexity also lowers product utility. The authors also find that consumers with high product expertise find mass customization configurations less complex than consumers with low product expertise and that for more expert consumers complexity has a less negative impact on product utility. The study has important managerial implications for how companies can design their mass customization configuration to increase utility and decrease complexity.marketing ;

Creating brands online: third party opinions and their effect on consumers\u27 trust in brands and purchase intentions

Consumer lack of trust in online vendors and brands is identified as one of the biggest obstacles in the growth of e-commerce. This study examined how third-party product reviews help in building consumers’ trust, in consumers’ perception of product quality, their brand attitudes and consumers’ purchase intention. The six cell experimental design tested the effect of consumer and expert online product reviews on fictitious web sites for high-involvement and low-involvement products. The findings indicate that online consumer product reviews perform better than online expert product reviews and no product reviews. Online product reviews affected visitors to a web site with a high-involvement product the most. The study implies that online consumer product reviews significantly affect consumers in a high-involvement condition and are more effective than online expert product reviews

An Economist's Guide to Digital Music

In this guide, we discuss the impact of digitalization on the music industry. We rely on market and survey data at the international level as well as expert statements from the industry. The guide investigates recent developments in legal and technological protection of digital music and describes new business models as well as consumers' attitude towards music downloads. We conclude the guide by a discussion of the evolution of the music industry