FWF project of the calendar week 31

As FWF project of the week a research project of three eeecon members was selected. Rudolf Kerschbamer, Daniel Neururer and Matthias Sutter investigated how the communication of a possible reason of a computer failure influences the costs of the computer repair. Their study was supported by the Austrian Science Fund FWF, and showed that if a customer tells his believes about the ...

... reason of the failure he will likely get punished by the computer expert with higher repair costs. "Know-it-all" is not welcome.

Credence goods are goods and services where consumers have less knowledge about the product than experts. Examples include car repairs, taxi rides abroad or medical services.

Results of the study

In the study "Credence goods markets and the informational value of new media: A natural field experiment", the researchers at the University of Innsbruck found that there is a positive correlation between repair costs and the level of information the customer provides to the expert. In this experiment, the RAM module in a computer was loosened. There were three differently treated groups for the experiment. The first group gives up the computer without saying anything, the second group mentions when giving up that they "googled" the problem and suspect that the RAM module is loose, and the last group also used Google but found a wrong reason for the failure. Those who "google" and communicate a false diagnosis pay on average 90 Euro. Surprisingly, a correct assessment of the damage does not lead to lower service costs. People who say nothing and people who give a correct error forecast pay on average about 40 Euro. Therefore, based on the study, the advice would be to tacitly hand over the computer and let the expert do his job.


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