Uwe Dulleck

On Doctors, Mechanics, and Computer Specialists: The Economics of Credence Goods

Most of us need the services of an expert when our apartments heating or our washing machine breaks down, or when our car starts to make strange noises. And for most of us commissioning an expert to solve the problem causes concern. This concern does not disappear even after repair and payment of the bill. On the contrary, one worries about paying for a service that was not provided, or receiving some unnecessary treatment. This article studies the economics underlying these worries. Under which conditions do experts have an incentive to exploit the informational problems associated with markets for diagnosis and treatment? What types of fraud exist? What are the methods and institutions for dealing with these informational problems? Under which conditions does the market provide incentives to deter fraudulent behavior? And what happens if all or some of those conditions are violated?

Do customer information programs reduce household electricity demand?--the Irish program

Abstract We study empirically the effectiveness of a customer information program to decrease energy demand by increasing efficient electricity use. This demand side management (DSM) program aims at reducing the lack of information on the customers’ side that is documented in related literature. We study the Irish DSM program which is particularly well suited to investigate this issue as strategic behavior is ruled out in this setting for both customers and suppliers. On the customers’ side because information programs allow only for a limited substitution of own effort. On the producers’ side because the specificity of the Irish case left no room for strategic behavior. We find that providing customers with information reduced overall electricity demand by roughly 7%, as well as reducing demand fluctuations over the year. Further, we find that the DSM program had a larger impact upon long run demand, with consumers’ short run demand behavior not being changed significantly.

Imported Equipment, Human Capital and Economic Growth in Developing Countries

De Long and Summers (1991) began a literature examining the impact of equipment investment on growth. In this paper we examine such a relationship for developing countries by considering imports of equipment from advanced countries as our measure of equipment investment for a sample of 55 developing countries. We examine whether the level of human capital in a country affects its ability to benefit from such investment. We find a complex interrelationship between imported equipment and human capital. Generally, the relationship between imported equipment and growth is lowest, and often negative, for countries with low levels of human capital, highest for countries within an intermediate range and somewhat in between for countries with the highest level of human capital.

The absent-minded centipede

Abstract In this note we apply the notion of absent-mindedness (see Piccione and Rubinstein, 1994), which is a form of imperfect recall, to the Rosenthal (1981) centipede game. We show that for standard versions of the centipede game a subgame perfect equilibrium exists in which play is continued almost to the end if one player is known to be absent-minded. In fact, it is sufficient that one player is known to be absent-minded with sufficiently high probability.

Within-subject Intra- and Inter-method consistency of two experimental risk attitude elicitation methods

Abstract We compare the consistency of choices in two methods used to elicit risk preferences on an aggregate as well as on an individual level. We ask subjects to choose twice from a list of nine decisions between two lotteries, as introduced by Holt and Laury (2002, 2005) alternating with nine decisions using the budget approach introduced by Andreoni and Harbaugh (2009). We find that, while on an aggregate (subject pool) level the results are consistent, on an individual (within-subject) level, behaviour is far from consistent. Within each method as well as across methods we observe low (simple and rank) correlations.

Heartbeat and Economic Decisions: Observing Mental Stress among Proposers and Responders in the Ultimatum Bargaining Game

The ultimatum bargaining game (UBG), a widely used method in experimental economics, clearly demonstrates that motives other than pure monetary reward play a role in human economic decision making. In this study, we explore the behaviour and physiological reactions of both responders and proposers in an ultimatum bargaining game using heart rate variability (HRV), a small and nonintrusive technology that allows observation of both sides of an interaction in a normal experimental economics laboratory environment. We find that low offers by a proposer cause signs of mental stress in both the proposer and the responder; that is, both exhibit high ratios of low to high frequency activity in the HRV spectrum.

Buying Online: An Analysis of Shopbot Visitors

Abstract We conduct an empirical study on the search and purchasing behavior of buyers on an Austrian price comparison site. On such a market a consumer typically searches for the cheapest price of a given product. Reliability and service of the supplier, however, are other important characteristics of an offer. We find robust evidence of consumer behavior that can be described as a two-stage procedure: shoppers first select a group of candidate offers based on the price only; then, in the actual buying decision consumers tradeoff a lower price with higher reliability of the retailer.

How Social Preferences Shape Incentives in (Experimental) Markets for Credence Goods

Credence goods markets suffer from inefficiencies caused by superior information of sellers about the surplus‐maximising quality. While standard theory predicts that equal mark‐up prices solve the credence goods problem if customers can verify the quality received, experimental evidence indicates the opposite. We identify a lack of robustness with respect to heterogeneity in social preferences as a possible cause of this and conduct new experiments that allow for parsimonious identification of sellers’ social preference types. Our results confirm the assumed heterogeneity in social preferences and provide strong support for our explanation of the failure of verifiability to increase efficiency.

Mirror, Mirror on the Wall, Who Is the Happiest of Them All?

This paper turns Snow-White?s magic mirror onto recent economics Nobel Prize winners, top economists and happiness researchers, and through the eyes of the ?man in the street? seeks to determine who the happiest academic is. The study not only provides a clear answer to this question but also unveils who is the ladies? man and who is the sweetheart of the aged. It also explores the extent to which information matters and whether individuals? self-reported happiness affects their perceptions about the happiness of these superstars in economics.

Buying Online: Sequential Decision Making by Shopbot Visitors

In this article we propose a two stage procedure to model demand decisions by customers who are balancing several dimensions of a product. We then test our procedure by analyzing the behavior of buyers from an Austrian price comparison site. Although in such a market a consumer will typically search for the cheapest price for a given product, reliability and service of the supplier are other important characteristics of a retailer. In our data, consumers follow such a two stage procedure: they select a shortlist of suppliers by using the price variable only; finally, they trade off reliability and price among these shortlisted suppliers.