Payment Systems, Supplier-Induced Demand, and Service Quality in Credence Goods: Results from a Laboratory Experiment

This experiment examines the relationship between payment systems and quality quantity of services provided in credence goods markets. By using a real-effort task to stimulate decision making service providers, study finds that do indeed have an impact on provision. Specifically, providers fee-for-service over-provide, while those salary under-provide services. Additionally, there is lack alignment under actual needs customers, resulting substantial loss customer benefits comparison salary. The also perform more faulty tasks than salary, indicating they may prioritize over their As for insurance, results this show no significant effect insurance number provided; however, customers without received significantly tasks. Based these results, concludes play important role determining Overall, highlights need better systems.