By Bryan Caplan
A dead 80-foot tree was leaning precariously toward our house, so my wife asked three tree-cutting firms to submit bids. The spread was absurdly wide: $1900, $875, and $3200 for the same job.
How is this possible? The quality and safety of the work couldn’t be too different, because the $875 firm did a fine job, and took plenty of precautions. The only way the $3200 firm could stay in business, it seems, is if a high fraction of customers are too lazy to get a second opinion.
Is that the real story, or am I missing something?