Abstract
•Credence goods markets have large informational asymmetries between consumers and sellers.•We study the market for computer repairs.•In our field experiment, we examine the value of a self-diagnosis.•This does not help consumers.•Yet, rating platforms provide useful information.•Better rated shops charge lower prices.
Credence goods markets are characterized by large informational asymmetries between consumers and expert sellers. In two waves of a natural field experiment in the market for computer repairs we study whether consumers benefit from accessing online information about their needs or previous consumers’ experience with particular sellers. We find that gaining noisy knowledge about one’s needs and revealing it to the seller is a costly mistake, since seemingly better informed customers pay, on average, higher prices. By contrast, accessing online ratings helps identifying sellers who provide appropriate quality at reasonable prices, in particular on rating platforms that filter out untrustworthy reviews.