Monday, February 8

Do car mechanics try to sell repairs you don't need?

In experimental economics, an easy study to do is run a simple economic game and see if different groups of people behave differently.

For example, I blogged in November about a study that looked at whether government employees are more selfish than the average worker when asked to donate to a charity. Another example: some health economists I know are interested in whether doctors behave differently than other businesspeople because of their Hippocratic Oath.

In this vein, a recent study out of the University of Innsbruck examined whether car mechanics are more likely than the average person to try to sell you more than you actually need. The team hauled a bunch of university students as well as Austrian car mechanic apprentices from the local trade school into their lab. They played an economic game with credence goods — a product where the seller knows everything about it but the buyer is pretty clueless (think car repairs!). The results are what you probably expected.

"[C]ar mechanics provide the high quality [product] when the low one is needed significantly more often than students," the study found. "[W]hen comparing the provision behavior of car mechanics with that of a standard subject pool, we find that car mechanics have a strong propensity to provide unnecessary repairs."

These kinds of studies are fun to blog about, but I'm not sure how valuable they really are. In general, a good economic theory should apply broadly; if a theory explains how some people behave but not others, it's not very good. So while these types of experiments can strengthen stereotypes surrounding different groups, I don't think they contribute much in terms of advancing general economic theories. It's fine that you can run an experiment with car mechanics that strengthens the stereotype that they'll sell you something you don't need, but what can we learn from it?