Impact of Second Opinions in Credence Goods Markets

Credence goods are characterised by two aspects, a high information asymmetry between the service providers and the consumers, and the inability to fully verify the quality of service obtained even ex-post. With theoretical and experimental works both indicating the existence of fraudulent behaviour in these markets, understanding the methods that help in mitigating fraud is essential. While obtaining multiple opinions has been suggested as a potential mechanism to limit fraudulent behaviour, the existing experimental evidence on the impact of multiple opinions in credence goods markets is mixed. We conduct a laboratory experiment to examine the impact of revealing the intent of obtaining another opinion to the first expert and the impact of revealing the initially obtained opinion to the second expert. Our experiment finds that the first experts do not show increased levels of honesty when they are aware of another opinion being sought by the customer and their opinion being shared with a second expert. On the other hand, the second experts do not show significantly higher levels of selfishness than the individual or first experts but instead are more likely to be selfish when the first experts are selfish. The results from our experiment indicate that obtaining multiple opinions and revealing opinions to multiple experts is not beneficial to customers and does not increase market efficiency in credence goods markets.