Second opinions in high-stakes credence goods markets: transparency as a discipline mechanism

We study second opinions in fixed-price credence goods markets, in which strategic experts have strong incentives to overtreat consumers, a phenomenon often observed in healthcare. This setting has been largely overlooked in the literature, likely because second opinions are ineffective: strategic experts always overtreat, and consumers never seek a second opinion. We depart from the benchmark by introducing a share of honest experts – who never overtreat – and a degree of transparency, defined as the probability that an expert providing a second opinion knows that the consumer has already received a prior recommendation. We show that if transparency exceeds a critical threshold, second opinions discipline strategic experts, provided the share of honest experts is neither too low nor too high. We identify the level of transparency that maximizes legitimate welfare – defined as the sum of the consumer’s expected utility and the expected utility experts derive from behaving honestly. Unlike in low-stakes environments, full transparency – though it never maximizes legitimate welfare – still performs better than no transparency.