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Agency Problems and Reputation in Expert Services: Evidence from Auto Repair
Author(s) -
Schneider Henry S.
Publication year - 2012
Publication title -
the journal of industrial economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.93
H-Index - 77
eISSN - 1467-6451
pISSN - 0022-1821
DOI - 10.1111/j.1467-6451.2012.00485.x
Subject(s) - reputation , agency (philosophy) , quality (philosophy) , service (business) , business , test (biology) , field (mathematics) , mechanism (biology) , marketing , actuarial science , political science , sociology , paleontology , philosophy , mathematics , epistemology , pure mathematics , law , biology , social science
Using a field experiment involving undercover visits to auto repair garages with a test vehicle, I first examine how asymmetric information between mechanics and motorists over auto repair service quality affects outcomes. I then examine whether reputation mitigates these problems via a matched‐pair treatment in which undercover researchers appeared as either one‐time or repeat‐business customers. The results indicate that under and overtreatment are widespread, and that reputation via a repeat business mechanism does not improve outcomes significantly.