Second opinions and online consultations

Authors:
Zafer D. Ozdemir;M. Tolga Akçura;Kemal Altinkemer
Affiliations:
Richard T. Farmer School of Business, Miami University, Oxford, OH;Krannert Graduate School of Management, Purdue University, West Lafayette, IN;Krannert Graduate School of Management, Purdue University, West Lafayette, IN
Venue:
Decision Support Systems
Year:
2006

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Abstract

Consumers increasingly obtain direct consultations from experts, thanks to the prevalent use of Information Technology and the Internet. Motivated by the online consultation practices of reputed institutions such as Harvard University hospitals and the Cleveland Clinic, we develop a duopoly model and study the strategies of high-quality experts in business-to-consumer consultation markets. Experts decide whether to provide first or second opinions and serve face-to-face and/or online. The experts' skills and the offered quality levels differ. We show that both the elimination of transaction costs and the reduction in the diagnostic accuracy in online markets impact the profitability of selling second opinions more favorably relative to that of selling first opinions, providing incentives for high-quality experts to specialize as second opinion providers. We also show that high-quality experts can charge higher face-to-face prices by adopting the online channel.