individual heterogeneity and cultural attitudes in credence goods provision abstract i study the heterogeneity of credence goods provision in taxi drivers taking detours in new york city first i document that there is significant detouring on average by drivers second there is significant heterogeneity in detouring across individuals yet each individual s propensity to take detours is stable drivers who detour almost always detour while those who do not detour almost never do drivers who take longer detours on each trip also take such trips more often third cultural attitudes plausibly explain some of this heterogeneity in behavior across individuals

consumer demand for food diversity evidence for germany abstract whereas a large number of empirical studies have been devoted to analysing consumer demand for specific products much less attention has been paid to the household s demand for product variety the number of different products consumed in a specific time period this paper analyses consumer demand for food variety in germany the econometric analysis of 4632 households suggests that variety significantly increases with income and the number of children aged between 7 and 17 years and is significantly higher if the family lives in larger cities in east germany and the housekeeping person is not additionally working full time a single male household consumes a significantly smaller number of different food products the significant and positive impact of household income on food variety is in line with the hypothesis that consumption evolves along a hierarchical order as income increases

the food retail revolution in poor countries is it coming or is it over abstract global retail chains are becoming increasingly dominant in the global food trade and their rise leads to dramatic impacts on agricultural supply chains and on small producers however the prospects and impacts of a food retail revolution in poor countries are not yet well understood here i examine this question in madagascar a poor but stable country in which global retailers have been present for over a decade the survey and analysis find that while global retail chains sell better quality food their prices are 40 90 higher ceteris paribus than those seen in traditional retail markets in poor settings characterized by high food price elasticities a lack of willingness to pay for quality and small retail margins supermarkets appear to set prices with an eye toward maximizing profits on the basis of price inelastic demands for quality products from a small middle class interested in one stop shopping it seems unlikely that global retail chains will further increase their food reta

quality and accountability in health care delivery audit study evidence from primary care in india we present unique audit study evidence on health care quality in rural india and find that most private providers lacked medical qualifications but completed more checklist items than public providers and recommended correct treatments equally often among doctors with public and private practices all quality metrics were higher in their private clinics market prices are positively correlated with checklist completion and correct treatment but also with unnecessary treatments however public sector salaries are uncorrelated with quality a simple model helps interpret our findings where public sector effort is low the benefits of higher diagnostic effort among private providers may outweigh costs of potential overtreatment

eldercare hours work hours and perceived filial obligations in this paper we take a fresh look at the magnitude of the trade off between caring informally for a parent and paid work we adopt a simultaneous approach with a primary focus on how hours of car

institutional solutions to the asymmetric information problem in health and development services for the poor summary the world s poorest pay for professional services and thus are in a market whether the services are provided in the public or private sectors the associated problems of unequal information are particularly acute in undergoverned countries where state regulation is weak we systematically review the evidence on solutions to these problems in a variety of professions payments by clients are more likely to have a positive effect on quality if they are made through locally managed organizations rather than directly to individual practitioners particularly if those organizations have an institutionalized history of other regarding values and incorporate client participation

agroindustrialization globalization and international development an overview of issues patterns and determinants this paper offers an overview for a special issue on agroindustrialization globalization and international development it sets out a conceptual framework for understanding the links among these three broad phenomena and then discusses emerging issues and evidence concerning the factors conditioning agroindustrialization in developing countries and the subsequent effects on employment poverty and the natural environment we conclude with a research agenda

shaping beliefs in experimental markets for expert services guilt aversion and the impact of promises and money burning options in a credence goods game with an expert and a consumer we study experimentally the impact of two devices that are predicted to induce consumer friendly behavior if the expert has a propensity to feel guilty when he believes that he violates the consumer s payoff expectations i an opportunity for the expert to make a non binding promise and ii an opportunity for the consumer to burn money in belief based guilt aversion theory the first opportunity shapes an expert s behavior if an appropriate promise is made and if it is expected to be believed by the consumer by contrast the second opportunity might change behavior even though this option is never used along the predicted path experimental results confirm the behavioral relevance of i but fail to confirm ii

world poverty and the role of agricultural technology direct and indirect effects agricultural technology can help reduce poverty through direct and indirect effects direct effects are gains for the adopters while indirect effects are gains derived from adoption by others leading to lower food prices employment creation and growth linkage effects conceptualising and measuring these effects is highly complex yet is needed for each region if technology is to be used as an effective instrument for poverty reduction we propose a methodology for doing this in the context of computable general equilibrium modelling and apply it to archetype models for africa asia and latin america results show that the dominant effect of technology on poverty is through direct effects in africa indirect agricultural employment effects in asia and linkage effects through the rest of the economy in latin america in each case increasing the poverty reduction effect through the targeting of technology across crops and through complementary rural development programmes is also explored

why don t people trust experts abstractcredence goods such as health care legal and financial services and auto repair create a conflict of interest by requiring experts to diagnose and provide services to uninformed consumers mistreatment of consumers appears widespread empirically but a simple explanation for mistreatment under realistic assumptions has proved elusive i generalize uwe dulleck and rudolf kerschbamer s credence good model to incorporate the highly realistic assumption that consumers do not observe experts cost functions the model guarantees equilibrium mistreatment in a wide range of price setting and market environments the model also yields testable implications regarding the nature of mistreating firms and the direction of mistreatment

health and work in the family evidence from spouses cancer diagnoses abstract using canadian administrative data from multiple sources we provide the first nationally representative estimates for the effect of spouses cancer diagnoses on individuals employment and earnings and on family income our identification strategy exploits unexpected health shocks and combines matching with individual fixed effects in a generalized difference in differences framework to control for observable and unobservable heterogeneity while the effect of spousal health shocks on labor supply is theoretically ambiguous we find strong evidence for a decline in employment and earnings of individuals whose spouses are diagnosed with cancer we interpret this result as individuals reducing their labor supply to provide care to their sick spouses and to enjoy joint leisure family income substantially declines after spouses cancer diagnoses suggesting that the financial consequences of such health shocks are considerable

the rise of supermarkets and changing expenditure patterns of poor rural households case study in the transkei area south africa abstract since the late 1990s the number of supermarkets in south africa has been steadily growing due to a more effective and efficient management and procurement system the supermarkets can benefit from economics of scale and sell food at a relative low price in this paper we present a case study of two villages in the transkei area of south africa in these poor rural communities the majority of households now buy their main food items from supermarkets rather than from local shops and farmers while presenting an important step towards livelihood development and food security these supermarkets form also a strong competitor for local agricultural sales the supermarkets provide many food items at lower prices with an increase in income the households look for variety and exotism in their food products and will most likely find this in the supermarkets rather than the local stores we argue therefore that development programs should focus on the local growers access to the supermarket procurement systems

politicians as experts electoral control and fiscal restraints we propose an argument for fiscal restraints that is based on the premise that the services of politicians are credence goods politicians are experts who specialize in observing the true state of the economy budget maximizing politicians are better informed than the electorate about the level of public spending necessary to manage public affairs voters who are able to observe the size of the budget but not the necessary level of spending affect the government s spending behavior via electoral control a fiscal restraint limits the maximum spending a government can choose we identify conditions under which such a fiscal restraint improves voter welfare and discuss the role of the political opposition as a second expert in situations in which the state of the economy requires a level of spending which exceeds the fiscal restraint

the earnings of informal carers wage differentials and opportunity costs a substantial proportion of working age individuals in britain are looking after sick disabled or elderly people often combining their work and caring responsibilities previous research has shown that informal care is linked with substantial opportunity costs for the individual due to forgone wages as a result of non labour market participation in this paper we show that informal carers exhibit further disadvantages even when participating using the british household panel study bhps we decompose wage differentials and show that carers can expect lower returns for a given set of characteristics with this wage penalty varying along the pay distribution and by gender furthermore opportunity costs from forgone wages and wage penalties are estimated and found to be substantial

the liberalization of rice marketing in madagascar abstract madagascar s experience with rice marketing liberalization between 1985 and 1988 illustrates the many obstacles in the way of effective deregulation of agricultural markets the resistance of ambiguous regulation continuing limits on free entry attempts at cartelization and tenacious resistance of existing stakeholders and institutions at the same time the experience shows the ability of higher prices and freer markets to overcome much of this resistance and to stimulate production even in the presence of so called structural constraints such as poor roads weak extension services inadequate credit systems and input supply arrangements

quality quantity and spatial variation of price this paper develops and implements a method for estimating price elasticities of demand using cross sectional household survey data geographically clustered households report unit values which when corrected for quality effects and for measurement error indicate the underlying spatial variation in prices and can be matched to variation in demand patterns a simple model of quality choice is proposed while the correction for measurement error exploits the clustered design of such surveys data from a 1979 household survey from the ivory coast are used to estimate price elasticities for beef meat fish cereals and starches copyright 1988 by american economic association

efficient informal trade theory and experimental evidence from the cape town taxi market informal sectors in developing countries are often thought of as responses to rigid and cumbersome market regulations in this paper i study informal trade as a first best outcome in the model i propose rigid regulations can be necessary to achieve efficiency even though they are always sidestepped the key assumption is that the regulations define the trading parties fall back position in case the informal bargaining process breaks down i set up a field experiment to test the model s mechanisms in the cape town market for metered taxis consistent with the model i find that sidestepping the regulations increase cost efficiency taxis take the shortest route the price is however unaffected suggesting informal bargaining leads to a pareto improvement

the economics of credence goods an experiment on the role of liability verifiability reputation and competition credence goods markets are characterized by asymmetric information between sellers and consumers that may give rise to inefficiencies such as under and overtreatment or market breakdown we study in a large experiment with 936 participants the determinants for efficiency in credence goods markets while theory predicts that liability or verifiability yield efficiency we find that liability has a crucial but verifiability at best a minor allowing sellers to build up reputation has little influence as predicted seller competition drives down prices and yields maximal trade but does not lead to higher efficiency as long as liability is violated jel d12 d82

misselling through agents this paper analyzes the implications of the inherent conflict between two tasks performed by direct marketing agents prospecting for customers and advis ing on the product s suitability for the specific needs of customers when structuring salesforce compensation firms trade off the expected losses from misselling unsuitable products with the agency costs of providing market ing incentives we characterize how the equilibrium amount of misselling and thus the scope of policy intervention depends on features of the agency problem including the internal organization of a firm s sales process the transparency of its commission structure and the steepness of its agents sales incentives jel m31 m37 m52 when purchasing unfamiliar products consumers often rely on information and advice pro vided by representatives of the seller this creates the possibility of misselling the question able practice of a salesperson selling a product that may not match a customer s specific needs 1 this problem is particularly severe in markets for technically complex products such as con sumer electronics auto repairs medical care and retail financial services including securities pensions insurance policies and mortgages an important feature of these markets is that the seller often deals with the customer through an agent rather than directly for example financial brokers typically recommend purchase of a specific product after inquiring about their customers particular circumstances and needs the possibility of abuse has led to regulation in some of these markets most notably for securities transactions the financial industry regulatory authority finra the major self regulatory organization for securities firms operating in the united states mandates that broker dealers make a reasonable effort to obtain information about the individual characteristics of their noninstitutional cus tomers and to ensure that their recommendations are suitable to customers financial situations

credence goods misleading labels and quality differentiation due to differences in information disclosure mechanisms consumer misinformation about the quality of many credence goods is more endemic at intermediate levels of the quality spectrum rather than at the extremes using an oligopoly model of vertical product differentiation we examine how consumers overestimation of the quality of intermediate quality products affects firms incentives to improve product quality the firms non cooperatively choose the quality of their product before choosing its price or quantity irrespective of the nature of second stage competition bertrand or cournot we find that quality overestimation by consumers increases profit of the intermediate quality firm and motivates it to raise its product s quality in response the high quality firm improves its product quality even further but ends up with lower profit overall average quality of the vertically differentiated product improves which raises consumer surplus social welfare increases when the firms compete in prices but falls when they compete in quantities

second opinions and price competition inefficiency in the market for expert advice we consider a market in which an expert must exert costly but unobservable effort to identify the service that meets the consumer s need in our model experts offer competing contracts and the consumer may gather multiple opinions we explore the incentives that a competitive sampling of prices and opinions provides for experts to exert effort and find that there is a tension between price competition and the equilibrium effort in particular the equilibrium fails to realize the second best welfare optimum an intervention that limits price competition via price control increases welfare

the effect of informal care on work and wages cross sectional evidence in the united states finds that informal caregivers have less attachment to the labor force the causal mechanism is unclear do children who work less become informal caregivers or are children who become caregivers working less using longitudinal data from the health and retirement study we identify the relationship between informal care and work in the united states both on the intensive and extensive margins and examine wage effects we control for time invariant individual heterogeneity rule out or control for endogeneity examine effects for men and women separately and analyze heterogeneous effects by task and intensity we find modest decreases 2 4 percentage points in the likelihood of working for male caregivers providing personal care female chore caregivers meanwhile are more likely to be retired for female care providers who remain working we find evidence that they decrease work by 3 10hours per week and face a 3 percent lower wage than non caregivers we find little effect of caregiving on working men s hours or wages these estimates suggest that the opportunity costs to informal care providers are important to consider when making policy recommendations about the design and funding of public long term care programs

examining the relationship between the use of supermarkets and over nutrition in indonesia this study examines the relationship between the use of modern food retailers and health outcomes using data from a survey of 1 180 urban households in indonesia the dependent variables include adult and child body mass index and the share of individuals overweight and obese after controlling for individual and household characteristics and using standard and lewbel instrumental variable approaches to control for unobservable characteristics we do not find a statistically significant relationship between use of supermarkets and adult nutrition measures on the other hand there is mixed evidence for a negative effect of supermarkets on child nutrition particularly for those in high income households

on doctors mechanics and computer specialists the economics of credence goods most of us need the services of an expert when our apartment s 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

does self regulation work experimental evidence of the reputational incentives of self regulatory organizations self regulation sr is a common way of enforcing quality in markets such as banking financial services and several professions and in a variety of public and private organizations we provide experimental evidence of the reputational incentives of self regulatory organizations sros to publicly disclose versus cover up fraud in an incomplete information environment we find that observed behaviour is generally consistent with bayesian equilibrium when subjects are informed about the relative likelihood of fraud detection by a vigilant versus a lax sro type in particular a fraud disclosure equilibrium is supported when subjects are informed that the vigilant sro is more likely to detect fraud otherwise a cover up equilibrium is supported however when subjects are not informed about the relative likelihood of fraud detection by the sro types as expected in real sr situations no equilibrium is strongly supported our results suggest that in practice the reputation based incentives for ef

the economics of breakdowns checkups and cures a market in which the owner of a durable good x contracts with an expert for diagnostic and treatment services is studied good x may be in one of three states health disease or failure only experts can determine whether x is healthy or diseased and perform treatment the owner cannot tell whether recommended treatment is really needed this creates an information based demand for health insurance by risk neutral consumers imperfections in the market for spot insurance may give rise to free diagnostic checks strategic procrastination and long term health maintenance agreements

what drives taxi drivers a field experiment on fraud in a market for credence goods credence goods are characterized by informational a symmetries between sellers and consumers that invite fraudulent behavior by seller s this paper presents the results of a natural field experiment on taxi rides in athens g reece set up to measure different types of fraud and to examine the influence of passengers p resumed information and income on the extent of fraud results reveal that taxi drivers c heat passengers in systematic ways passengers with inferior information about optimal routes are taken on longer detours while asymmetric information on the local tariff system l eads to manipulated bills higher income seems to lead to more fraud

traditional food traders in developing countries and competition from supermarkets evidence from indonesia indonesia s urban centers recently underwent an explosion of supermarkets with cheaper higher quality commodities and better services supermarkets have the potential to drive traders in traditional markets out of business in this paper we evaluate whether this is indeed the case we find that traditional traders experienced declines in their business however both qualitative and quantitative findings indicate that the main cause of decline is not supermarkets instead traditional markets are plagued with internal problems and face increasingly bitter competition from street vendors therefore the policy recommendations include strengthening traditional traders and seriously tackling the problem of street vendors

signaling corporate social responsibility third party certification versus brands corporate social responsibility csr is a credence attribute of products which can be signaled either through a label certified by a third party or via unsubstantiated claims used as part of a brand building strategy we use an experimental posted offer market with sellers and buyers to compare the impact of these signaling strategies on market efficiency only third party certification gives rise to a separating equilibrium and an increase in csr investments unsubstantiated claims can generate a halo effect on consumers whereby the latter are nudged into paying more for the same level of csr investments by firms

the effect of price and income changes on food energy intake in sri lanka data is used to analyze the food acquisition behavior of households from a 1980 81 survey designed to be nationally sectorally and regionally representative of sri lanka the poor are shown to be much more responsive to price and income changes than other income groups the urban population generally exhibits lower income elasticities of demand for food commodities the poor appear to efficient substitutors thereby mitigating the effects of a price change on caloric intake the important exception is rice whose elasticity of calorie consumption with respect to price was about 4 times higher than for any other commodity the reluctance of households to substitute for rice even when faced with rising prices coupled with its large budget share show rice to be the most important consumption good higher rice prices are an important determinant of poverty for landless and urban workers moderating food prices preferably through technological change is a key ingredient to raising consumption among the poor simulations show that even if there are rapid and proportional increases in expenditures of all income groups this will not dramatically increase caloric intake among the poor however if the absolute value of the increase in real expenditures were distributed equally to all households there would be a marked increase in the of households consuming an adequate diet

strategic choice of quality when quality is costly the persistence of the high quality advantage in a two firm two stage model of vertical product differentiation i show that for every convex fixed cost function of quality the firm that chooses the higher quality at the first stage earns the higher profits the result holds for the pure strategy equilibrium in the simultaneous quality game and it holds as well if firms choose their qualities in sequential order

honesty in a model of strategic information transmission we consider the following simple model of consumer fraud consumers need one of two possible repairs an expensive repair denoted e or an inexpensive repair denoted i the exogenous probability that a consumer needs the more costly remedy is r each consumer is assumed to know r an expert can observe with certainty which of the two repairs is needed and can offer to sell either to the consumer in a simple extension we allow for uncertainty with respect to the expert s observation we assume that selling the expensive remedy to a consumer who needs only the inexpensive one is more profitable than selling the inexpensive one thus h eii h1 iji where h denotes profit and i denotes conditional on needing the profit functions are increasing in the price of the respective repairs for convenience we suppress the dependence of h on prices in our notation we also assume that a consumer prefers to obtain the appropriate repair to the inappropriate one thus u eie u ije and u iii u eii where u is the consumer s payoff lastly we assume that the functions u eje and u e i are decreasing in the price of the expensive repair and that u iie and u iii are decreasing in the price of the inexpensive repair we also assume that u iie is decreasing in the price of the expensive repair since the consumer ultimately buys the expensive repair in this case see below for further assumptions regarding the repairs we are interested in the equilibrium levels of honesty in this model how honest is the expert at the equilibrium do consumers always follow the expert s advice does the level of honesty increase as the interests of the agents become more similar in a sense to be defined below our assumptions are similar to those in the abstract strategic information transmission models of vincent crawford and joel sobel 1982 and jerry green and nancy stokey 1980 we follow the former paper which asks whether the signals sent become less noisy as the agents preferences become more similar despite the similarity of our model to crawford sobel s we arrive at some different conclusions with respect to the expert s honesty vis a vis the agents closeness of interests we explain this in detail in section iii in addition we allow that the expert may be uncertain about the true state of the world we also explicitly model the level of expert honesty which extends crawford sobel the outline of the paper is as follows in section i we provide the details of the model and show that a unique equilibrium exists comparative static results and a simple extension incorporating the assumption of the incompetent expert are given in section ii we draw comparisons with crawfordsobel in section iii in section iv we conclude with a brief summary

consumer information in a market for expert services abstract we present a model of credence goods in which the consumers are heterogenous in terms of the valuation they place for getting a serious problem fixed we introduce consumer information into this framework by assuming that prior to visiting an expert some consumers receive an information signal about whether they have a serious or a minor problem we show that when the fraction of consumers with low willingness to pay is sufficiently high the expert does not cheat any low valuation consumer regardless of their information status but cheats the high valuation consumers those high valuation consumers with bad signals are the most frequent victims of cheating whereas those with good signals are the least likely victims when the fraction of consumers with low willingness to pay is below a certain threshold however the unique equilibrium involves no cheating

on the role of verifiability and commitment in credence goods markets a client has a problem but does not know whether it is serious or minor she consults an expert who can correctly diagnose and fix her problem this paper characterizes the equilibrium pricing and recommendation strategies of an expert under the assumptions that i the type of treatment is verifiable by the client ii the client has the option of rejecting any treatment recommendation and iii the expert is not liable for the outcome of the treatment it is found for any parameter configuration that there exist equilibria in which the expert makes fraudulent recommendations resulting in inefficient treatment the market outcome is compared with that under an alternative market environment in which the expert is liable for treatment outcome but the type of treatment performed is non verifiable it is shown that for some parameter configurations the equilibrium is more efficient when liability is in place than when the treatment is verifiable these findings stand in sharp contrast to the received wisdom that the market outcome under verifiability of treatment is efficient while the market outcome under liability for outcome is not finally this paper shows that the existence of some honest experts may induce more fraudulent behavior by opportunistic experts

credence goods costly diagnosis and subjective evaluation we study contracting between a consumer and an expert the expert can invest in diagnosis to obtain a noisy signal about whether a low cost service is sufficient or whether a high cost treatment is required to solve the consumer s problem this involves moral hazard because diagnosis effort and signals are not observable treatments are contractible but success or failure of the low cost treatment is observed only by the consumer payments can therefore not depend on the objective outcome but only the consumer s report or subjective evaluation a failure of the low cost treatment delays the solution of the consumer s problem by the high cost treatment to a second period we show that the first best solution can always be implemented if the parties discount rate is zero an increase in the discount rate reduces the range of parameter combinations for which the first best can be obtained in an extension we show that the first best is also always implementable if diagnosis and treatment can be separated by contracting with two different agents

transparency in markets for experience goods experimental evidence we propose an experimental design to investigate the role of information disclosure in the market for an experience good the market is served by a duopoly of firms that choose both the quality and the price of their product consumers differ in their taste for quality and choose from which firm to buy we compare four different treatments in which we vary the degree to which consumers are informed about quality contrary to theoretical predictions firms do not differentiate quality under full information rather both tend to offer products of similar high quality entailing more intense price competition than predicted by theory under no information we observe a lemons outcome where quality is low at the same time firms manage to maintain prices substantially above marginal cost in two intermediate treatments quality is significantly higher than the no information level and there is evidence that prices become better predictors of quality taken together these findings suggest that information disclosure is a more effective tool to raise welfare and consumer surplus than theory would lead one to expect jel l15 c91 d82

the competitive advantage of honesty abstract we study competitive markets where firms may lie to their workers to reduce costs consumers may benefit from firms dishonesty through lower market prices does firms dis honesty affect consumers purchasing decisions our experiment shows that when honesty is fully transparent it can provide a competitive advantage honest firms sell more and despite higher costs achieve higher profits this finding is in line with our equilibrium predictions when allowing for dishonesty averse consumers by identifying circumstances in which consumers although not the addressee of dishonesty punish firms for their within firm dishonesty we contribute both to behavioral ethics and behavioral industrial organization

who will care employment participation and willingness to supply informal care the impact of informal care responsibilities on the willingness and ability of caregivers to undertake paid employment has been the subject of a number of studies in contrast the effect of employment status on willingness to undertake informal care has been less well explored this paper concentrates on this less studied direction of causality using the data provided by 15 waves of the british household panel survey we find that employment participation and earnings both impact negatively on willingness to supply informal care this evidence has implications for health and social care policy since informal care has been shown to be a significant substitute for formal long term care

when do experts cheat and whom do they target a credence good is a product or service whose usefulness or necessity is better known to the seller than to the buyer this information asymmetry often persists even after the credence good is consumed i propose two new theories of expert cheating suggesting that identifiable heterogeneities among customers can cause expert sellers to defraud their customers according to these theories cheating arises as a substitute for price discrimination and experts cheat selectively for instance experts target high valuation and high cost customers finally selective cheating may damage the communication of useful information from customers to experts and result in inferior services

food value chain transformations in developing countries selected hypotheses on nutritional implications we examine how the transformation of food value chains fvcs influence the triple malnutrition burden undernourishment micronutrient deficiencies and over nutrition in developing countries we propose a fvc typology modern traditional modern to traditional and traditional to modern that takes into account the participants the target market and the products offered next we propose selected hypotheses on the relationship between each fvc category and elements of the triple malnutrition burden the primary finding is that the transformation of fvcs creates challenges and opportunities for nutrition in developing countries for example modern fvcs may increase over nutrition problems and alleviate micronutrient deficiencies for urban people with relatively high incomes however they have little nutritional impacts among rural residents and urban poor people who primarily depend on traditional fvcs to access adequate quantities of calories and micronutrients in addition modern food manufacturers are leveraging traditional distribution networks modern to traditional fvcs substantially increasing access to low priced processed packaged foods in rural areas and low income urban neighbors with mixed impacts on the triple burden of malnutrition further research should focus on the influence of fvc transformation on reduction of micronutrient deficiencies on modeling demand substitution effects across food categories and the attendant policy implications for malnutrition

an economic analysis on overbilling incentives and auditing programs an institutional auditing program typically consists of the following steps a sample audit the decision to move to the full audit a settlement offer and the full audit statistical sampling techniques are often used to estimate the overbilling percentage and amount this paper discusses the optimal settlement offer the net recovery through auditing the condition for the auditors to move to the full audit and how an auditing program can be truly cost effective this paper provides an evaluation for the statistical sampling techniques to an auditing program the economic incentives of a contractor to overbill are also identified finally it presents the key metrics and the managerial implications for auditing managers to design or enhance their auditing programs

contract farming smallholders and rural development in latin america the organization of agroprocessing firms and the scale of outgrower production abstract this paper demonstrates how contract farming functions as an economic institution and explores the causes of the observed variation in the scale of outgrower production in latin america we outline how market imperfections and transaction costs influence the decision of agroprocessing firms to contract out vertically integrate or use spot markets to obtain raw product the paper demonstrates how market conditions are likely to be associated with particular outgrower characteristics under contract farming an analysis of the mexican frozen vegetable industry illustrates determinants of successful and unsuccessful small scale contracting and suggests alternative policies to promote contract farming with smallholders

gender effects in the credence goods market an experimental study abstract in this paper we offer further explanation for differences in earnings across genders we investigate difference in preferences in payment systems for credence goods we find that women were no less likely to select variable rate payment schemes as compensation for providing credence goods than men however overall earnings remained higher for men than for women disaggregating behavior by type of payment and gender reveals that women who chose fee for service provided significantly fewer units of services paid for than men who chose fee for service this difference accounts for the lower overall earnings for women in our experiments

the labour market costs of community care this paper reports an empirical investigation into the influence of informal care responsibilities on the labour supply of women the objective is to examine the argument that the uk policy of caring for the chronic sick in the community involves a nontrivial opportunity cost in the form of the forgone labour supply of the informal carers upon which it relies we find that informal carers who care for less than 20 h per week are in fact more likely to participate in the labour market but tend to work for fewer hours per week than otherwise similar noncarers informal carers who care for 20 h or more a week are less likely to participate but only slightly however when they do undertake formal employment they tend to earn less per hour and work for fewer hours per week

the opportunity costs of informal care does gender matter in this paper we investigate the costs borne by both male and female carers in terms of their forgone formal employment opportunities traditionally informal care was supplied by women but nowadays women are not only more likely to work but also likely to be significant contributors to family finances for women this implies that the size of any forgone earnings cost of informal care is increasing at the same time population ageing is making for increasing numbers requiring care from a policy perspective it is therefore helpful to consider a less traditional but nevertheless important source of informal care men we find that both male and female carers bear indirect costs in that they are less likely to be in paid work than otherwise similar non carers and when they are in paid work they earn significantly less however we find that the motivation for lower employment participation is not the same for men as it is for women

governance and trade in fresh vegetables the impact of uk supermarkets on the african horticulture industry production of fresh vegetables for export has grown rapidly in a number of countries in sub saharan africa over the last decade this trade brings producers and exporters based in africa together with importers and retailers in europe large retailers in europe play a decisive role in structuring the production and processing of fresh vegetables exported from africa the requirements they specify for cost quality delivery product variety innovation food safety and quality systems help top determine what types of producers and processors are able to gain access to the fresh vegetables chain and the activities they must carry out the control over the fresh vegetables trade exercised by uk supermarkets has clear consequences for inclusion and exclusion of producers and exporters of differing types and for the long term prospects for the fresh vegetables industry in the two major exporting countries studied kenya and zimbabwe

lifting the burden state care of the elderly and labor supply of adult children we use a reform in the federal funding of care for the elderly in norway to examine the effects of formal care expansion on the labor supply decisions of middle aged children we find a consistent and significant negative impact of formal care expansion on insured work absences for the adult daughters of single elderly parents this effect is particularly strong for daughters with no siblings who are also more likely to exceed earnings thresholds after the reform we find no impacts of the reform on daughters mobility or parental health and no effects on adult sons

information transmission in regulated markets the seminal papers of vincent p crawford and joel sobel 1982 and jerry green and nancy stokey 1980 study models in which a signal about the state of the world is transmitted from a perfectly informed sender to an uninformed receiver the authors study a model in which multiple signalers compete for consumers the authors ask how much information is revealed how consumers shopping around affects this information and how each is affected by incentives an implication of the model is that in a price regulated market for health care patients should not be prohibited from gathering more than one opinion

second degree moral hazard in a real world credence goods market in a field experiment in the market for taxi rides we investigate a phenomenon called second degree moral hazard the tendency of the supply side in a market to react to anticipated moral hazard on the demand side by increasing the extent or price of the service our moral hazard manipulation consists of some passengers explicitly stating that their expenses will be reimbursed this has a strong positive effect on the likelihood and the amount of overcharging and consequently increases consumer expenditure our results suggest that second degree moral hazard may have a severe impact on the provision of credence goods

job creation or destruction labor market effects of wal mart expansion this paper estimates the effect of wal mart expansion on retail employment at the county level using an instrumental variables approach to correct for both measurement error in entry dates and endogeneity of the timing of entry i find that wal mart entry increases retail employment by 100 jobs in the year of entry half of this gain disappears over the next five years as other retail establishments exit and contract leaving a long run statistically significant net gain of 50 jobs wholesale employment declines by approximately 20 jobs due to wal mart s vertical integration no spillover effect is detected in retail sectors in which wal mart does not compete directly suggesting wal mart does not create agglomeration economies in retail trade at the county level

supermarket choice and supermarket competition in market equilibrium multi store firms are common in the retailing industry theory suggests that cross elasticities between stores of the same firm enhance market power to evaluate the importance of this effect in the u k supermarket industry we estimate a model of consumer choice and expenditure using three data sources profit margins for each chain a survey of consumer choices and a data set of store characteristics to permit plausible substitution patterns the utility model interacts consumer and store characteristics we measure market power by calculating the effect of merger and demerger on nash equilibrium prices demerger reduces the prices of the largest firms by between 2 and 3 8 depending on local concentration mergers between the largest firms lead to price increases up to 7 4

market power and rents in global supply chains market power and competition policy in food supply chains has emerged as an important economic issue in economics and a highly sensitive item on the policy agenda consolidation is taking place in the food industry both in high income countries and in emerging economies but the impact of concentration in global food chains on efficiency and rent distribution is more nuanced and complex than often claimed we review the literature and extend it by developing a model which explicitly takes into account market imperfections and contract enforcement problems in supply chains increased competition benefits farms by improving contract conditions but contract enforcement becomes more complicated

experts vs discounters consumer free riding and experts withholding advice in markets for credence goods this paper studies the incentives for credence goods experts to invest effort in diagnosis if effort is both costly and unobservable and if they face competition by discounters who are not able to perform a diagnosis the unobservability of diagnosis effort and the credence characteristic of the good induce experts to choose incentive compatible tariff structures this makes them vulnerable to competition by discounters we explore the conditions under which honestly diagnosing experts survive competition by discounters we identify situations in which experts misdiagnose consumers in order to prevent them from free riding on experts advice and we discuss policy options to solve the free riding consumers cheating experts problem

your next of kin or your own career caring and working among the 50 of europe an increasing demand for both formal and informal care is likely to result from the ongoing demographic transition at the same time as there is a further move away from the traditional domestic division of labour public policy making that aims at increasing the supply of informal care necessitates knowledge about the relative importance of various incentives for individual care providers this paper takes as a point of departure that the willingness to supply informal care is partly explained by the extent to which it adversely affects labour market outcomes and analyses the effect on labour market outcomes of providing informal care to one s elderly parent s among the 50 of europe data from share survey of health ageing and retirement in europe was used to examine the association between on the one hand hours of informal care provided and on the other 1 the probability of employment 2 hours worked and 3 wages respectively the results suggest that giving informal care to one s elderly parents is associated with significant costs in terms of foregone labour market opportunities and that these adverse effects vary between countries

do they care too much to work the influence of caregiving intensity on the labour force participation of unpaid caregivers in canada the recent growth of the home care sector combined with societal and demographic changes have given rise to concerns about the adequacy of the supply of family and friend caregivers potential caregivers face competing time pressures that pull them in the direction of the labour market on one hand and towards unpaid caregiving duties on the other this paper examines the influence of unpaid caregiving on the labour supply of a cohort of working aged caregivers in canada with particular emphasis on caregiving intensity results suggest that caregivers are heterogeneous in both their caregiving inputs and associated labour market responses thereby underscoring the importance of controlling for caregiving intensity when measuring labour supply the negative influence of primary caregiving on labour supply appears to be at the level of labour force participation rather than on hours of work or wages

trust but verify monitoring inspection costs and opportunism under limited observability abstract is feedback on trustworthiness necessary for the functioning of economic relationships in many real world economic environments such feedback can at best be acquired through costly monitoring raising questions of how trust and efficiency can be maintained in the lab we conduct a modified finite horizon binary trust game in which we vary the observability of the trustee s actions in the baseline condition trustors can perfectly observe their trustee s actions we compare this to a condition in which that actions are unobservable and three conditions in which they must be actively monitored at zero low or high cost respectively counter intuitively differences in observability do not lead to significant differences in trust and efficiency but the levels are supported by very different information structures while trustors monitored every action under zero observation costs most of trusting actions were blind trustors did not learn whether their trust was honored or not under costly monitoring even under complete unobservability almost half of the available surplus was realized there are distributive impacts however the gains from trust favor trustees under the more adverse informational conditions the behavioral patterns are consistent with the fact that trustors beliefs about their trustee s conduct are almost invariant across conditions

optimal pricing with costly adjustment evidence from retail grocery prices in many theoretical models it is assumed that there are costs associated with adjusting prices in this paper the existence type and magnitude of such costs are investigated empirically a discrete choice dynamic programming model that nests fixed and variable costs is developed and econometric estimates of the adjustment cost function are obtained the data used to implement the model consist of weekly retail prices and sales of three brands of saltine crackers sold by four chains of grocery stores in a small u s town the study has several distinguishing characteristics first the data are highly disaggregate at the level of brand and store second variables are sampled at weekly intervals third the model nests fixed and variable adjustment costs and can therefore determine their relative importance finally the discrete choice model is both structural and dynamic

dynamic wage and employment effects of elder parent care this article formulates and estimates a dynamic discrete choice model of elder parent care and work to analyze how caregiving affects a woman s current and future labor force participation and wages the model incorporates parental health changes human capital accumulation and job offer availability the estimates indicate that women face low probabilities of returning to work or increasing work hours after a caregiving spell i use the estimated model to simulate the caregiving employment and welfare effects of a longer unpaid work leave than currently available under the family and medical leave act a paid leave and a caregiver allowance

credence goods experts and risk aversion abstract the existing literature on credence goods and expert services has overlooked the importance of risk aversion in this paper we extend a standard expert model of credence goods with verifiable service quality by considering risk averse consumers our results show that the presence of risk aversion reduces the expert s incentive to invest in diagnosis and may thus lead to consumers mistreatment

waiting for the invisible hand novel products and the role of information in the modern market for food abstract this paper places the modern spread of diet related chronic disease in the united states within the context of more than a century of innovation in food processing technology discovery in nutrition science and corrective policy measures aimed at improving public health we ask whether the current state of affairs represents a market failure and if so what might be done about it we argue that while today s industrial food system has its advantages the asymmetric information problems inherent to this system have resulted in a lemons style breakdown in the market for processed foods the appropriate policy response to such situations namely verifiable quality standards is well known but such policies are likely in the short run to reduce profits for existing large industrial producers of food in light of the food industry s long history of success at regulatory capture we propose the formation of a new independent food standards agency devoted to protecting the interests of the american consumer

ethics welfare and markets an economic analysis the present article examines society s welfare when goods with identical physical attributes can be produced using two alternative technologies one of them less ethically desirable but less expensive for at least some producers for the scenario where identification costs must be borne by producers and consumers of the high quality good the outcome under unregulated markets is identical to the optimal solution of a central planner constrained to neither ban the undesirable technology nor segregate the low quality good however under certain circumstances the unregulated market equilibrium may be improved upon by government intervention that shifts the burden of identification costs to the producers of the low quality good or which bans the production of the low quality good the optimal intervention needs to be determined case by case and depends on consumer preferences relative production costs and relative costs of identification and fraud prevention

credence goods monopolists abstract with a credence good consumers never discover how much of the good they actually need therefore the seller acts as the expert determining the customers requirements this information asymmetry creates strong incentives for the seller to cheat on services we analyze whether the market mechanism may induce non fraudulent seller behavior we consider four scenarios differing in the amount of information consumers have at hand to infer the seller s incentives to be honest in three constellations the profit maximizing credence goods monopolist provides honest services only in one scenario there is no trade

are fair trade goods credence goods a new proposal with french illustrations in the literature fair trade ft goods are usually associated with other products differentiated by process attributes such as organic food genetically modified gm food or child labour free clothing all of these products are regarded as credence goods this classification refers to the simplified definition of credence goods which describes product attributes which consumers cannot evaluate even after having consumed the good focusing on the characteristics of ft goods this article proposes a reassessment of the link between ft goods and credence properties as defined by darby and karni we first demonstrate that 1 the usual classification masks important particularities of ft goods compared to other goods with process attributes and 2 the full definition of credence goods may even provide a better description of the quality of ft goods however and this is our second theoretical contribution the lack of consensus among experts concerning ft standards and their level of efficiency encourage us to consider ft goods as indeterminate goods as defined by lupton this result leads us to suggest a new typology of product attributes summarized in an innovative diagram it sheds light on how competition between the different ft approaches works and why the ft market is still confined to a niche if not threatened with collapse we mainly illustrate our theoretical analysis with observations relating to the french ft market and institutions

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

informal care and long term labor market outcomes in this paper we estimate long run effects of informal care provision on female caregivers labor market outcomes up to eight years after care provision we compare a static version where average effects of care provision in a certain year on later labor market outcomes are estimated to a partly dynamic version where the effects of up to three consecutive years of care provision are analyzed our results suggest that there are significant initial negative effects of informal care provision on the probability to work full time the reduction in the probability to work full time by 4 percentage points or 2 4 5 0 if we move from point to partial identification is persistent over time short run effects on hourly wages are zero but we find considerable long run wage penalties

the political economy of long term care we build a two dimensional political economy model to explain the provision and financing of long term care and income redistribution voting agents differ in need and income opening up two conflicts one sets families with disabled parents who are in favor of a public long term care program against the ones without such parents who oppose public financing the other sets the poor against the rich with the former preferring heavier income taxation than the latter we show that a structure induced equilibrium always exists and that it is unique if informal care is provided in equilibrium the equilibrium not only explains the negative association of income inequality and long term care financing but also allows predictions about how demographic change might impact long term care arrangements and expenses

search bargaining and signalling in the market for legal services over the last eight centuries lawyers in common law countries have generally been precluded from buying their clients cases recently a number of economists and lawyers have argued that sale should be allowed so as to eliminate moral hazard particularly when contingent fees are used this argument is based on full information reasoning however if the lawyer has private information about the case value then compensation demands potentially signal this value when the client can search over lawyers we provide a formal model and a family of computational examples that show that allowing possibly partial purchase can reduce expected social efficiency

quality incentives for gps in a regulated market abstract this paper analyses whether gps in a capitation system have incentives to provide quality even though health is a credence good a model is developed where the quality of the service varies due to inherent differences between the gps and rational patients make choices based on the outcome of treamtent we find that it is difficult to provide appropriate incentives since the search activity of patients offsets direct effects of a change in reimbursement variation in the inherent ability of the gps is good since it increases the search activity of the patients and the optimal reimbursement scheme is inversely proportional to the dispersion in types finally we find that offering a menu of contracts can potentially increase social welfare above the level of a simple capitation regime but it tends to lead to a higher variation in quality levels

car mechanics in the lab investigating the behavior of real experts on experimental markets for credence goods credence goods such as car repairs or medical services are characterized by severe informational asymmetries between sellers and consumers leading to fraud in the form of provision of insufficient service undertreatment provision of unnecessary service overtreatment and charging too much for a given service overcharging recent experimental research involving a standard student subject pool has examined the influence of informational and market conditions on the type and level of fraud we investigate whether professional car mechanics as real sellers of credence goods react in the same way to changes in informational and institutional constraints while we find qualitatively similar effects in the fraud dimensions of undertreatment and overcharging for both subject pools car mechanics are significantly more prone to supplying unnecessary services in all conditions which could be a result of decision heuristics they learned in their professional training