{"id":1149,"slug":"dulleck-kerschbamer-sutter-2011-liability-verifiability-credence-goods","title":"Dulleck, Kerschbamer, Sutter 2011 (AER) — credence-goods lab experiment; \"liability has crucial effect, verifiability minor, reputation little influence\"","kind":"reference","scope":"business","status":"current","audiences":["kevin","candid-team"],"topics":["psychology-aversion","credence-goods","signalling-theory"],"reference_body":"**Claim:** Dulleck, Kerschbamer, and Sutter (2011) ran lab experiments on credence-good markets and found:\n\n- **\"Liability has a crucial, but verifiability at best a minor, effect\"** on market efficiency.\n- **\"Allowing sellers to build up reputation has little influence, as predicted.\"**\n\n**Source:** Dulleck, U., Kerschbamer, R., & Sutter, M. (2011). *American Economic Review* (lab experimental credence-good paper).\n\n**Confidence:** Verified (lab experimental).\n\n**For Candid — the load-bearing finding:** This is the empirical basis for the brief's strongest claim. In a credence-good market, **liability is what produces market efficiency**. Reputation, including third-party-mediated reputation, has little independent effect.\n\nOperational implications:\n\n- **Tarion's 7-year structural warranty** ([[tarion-1-2-7-warranty-detailed-coverage-by-year]]) is a stronger trust mechanism than any review aggregator. The warranty *carries liability*.\n- **A marketing vendor that offers no liability commitment competes against vendors with implicit liability** (existing relationships, peer-coach cohort exposure, reference contracts that can be called).\n- **The right Candid pitch surfaces and absorbs liability**: clear scope, documented milestones, transparent metrics, references the prospect can call without notice, milestone billing tied to inspectable deliverables.\n\n**Operationalized as:** [[rule-name-credence-good-problem-explicitly-propose-liability-structures]] and [[rule-better-copy-is-wrong-strategy-credence-good-requires-liability]].","rationale_body":null,"metadata":null,"links":{"outgoing":[{"slug":"research-brief-trust-networks-in-group-reputation-may-2026","title":"Research brief: trust, referral networks, and in-group reputation in Ontario's trades economy (May 2026 — Foundation Brief #3)","kind":"reference","scope":"business","link_type":"relates-to"}],"incoming":[{"slug":"why-in-group-dominates-three-compounding-mechanisms","title":"Why in-group reputation dominates market reputation for trades — credence-good + loss-aversion + low-frequency selection compound","kind":"reference","scope":"business","link_type":"depends-on"},{"slug":"rule-better-copy-is-wrong-strategy-credence-good-requires-liability","title":"R5 — Recognize \"better marketing copy\" is the wrong strategy for a credence-good market; solution is liability + verifiability + in-group reputation, not copy","kind":"rule","scope":"business","link_type":"depends-on"},{"slug":"rule-name-credence-good-problem-explicitly-propose-liability-structures","title":"R8 — Name the credence-good problem explicitly with prospects; propose liability + verifiability structures rather than projecting unwarranted confidence","kind":"rule","scope":"business","link_type":"depends-on"}]},"created_at":"2026-05-25T13:34:11.182Z","updated_at":"2026-05-25T13:34:11.182Z"}