Carlos Oyarzun, Lana Friesen, Metin Uyanik and Priscilla Man write for The Conversation.
You leave your car at the mechanic for a routine service ahead of your summer escape to the coast. When your mobile rings, you are stricken by unwelcome news: the mechanic goes through a list of parts that urgently need replacing to avoid a breakdown in the middle of the freeway. After accepting your fate, you never learn whether you really needed to replace those parts, or if the mechanic has just ripped you off.
Services like these - for which it remains unclear whether the service was really needed - are what economists call “credence goods”. Credence goods markets are a hotbed for questionable practices. The typical advice for consumers is to get a second opinion and check the reviews.
But what if a well-meaning mechanic discovers your car needs a major repair? In this case, the mechanic faces an existential dilemma: if they offer the right repairs, they may appear to be taking advantage when they are just trying to fix your car.
