The ways to address this problem are “usual and customary[ed- autocorrect] prices”, consumer ratings, information transparency, externalities such as courts to

The ways to address this problem are “usual and customary[ed- autocorrect] prices”, consumer ratings, information transparency, externalities such as courts to punish fraud and malpractice, and skin in the game. I have thought about this a lot in the context of real estate- up to recently, agents typically got a fixed commission (generally 3% each for buyer and seller in the places I’ve lived). There is a moral hazard in that, assuming that the agent can impact my sales price favorably with effort on their part. If they’re helping me buy a house, and they get a percentage, then it’s in their interest for me to overpay. If I’m selling a house, then the margin for increasing the sale price above market value is probably not worth the effort ($300 for every $10k increase in sale price). My solution (I have not tried it yet) is to structure a sales rep contract such that we agree on a target price for the standard commission, but increase the commission greatly for the sale price amount above the target price. Maybe 3% up to the sale price and 50% above that. That’s what I term “skin in the game”. Assuming I have done a minimum of homework (looked for agent ratings and avoided bad or inexperienced agents; looked at comparables on Zillow to make sure the proposed sale price is market appropriate, etc.) then I should get a good outcome. Doctors and state license boards often make it difficult to get informed consumer type information on doctors. Our insane medical system in the US almost never supports price transparency. So we have a long way to go there. Note one other thing. I am trying to optimize for the best outcome I can assuming limited resources. If you have unlimited resources then you can hire and fire lots of doctors, overpay for performance, and generally do things that are unavailable to mere mortals. Also I am not assuming or eve trying to achieve perfect results (most beneficial result available at the lowest price point). I think that is a fool’s game.