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That'S News To Me! Information Revelation In Professional Certification Markets

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  • GINGER ZHE JIN
  • ANDREW KATO
  • JOHN A. LIST

Abstract

"Using sportscard grading as an example, we employ field experiments to investigate the informational role of professional certifiers. Empirical results suggest three patterns: first, the grading certification provided by the first professional certifier offers new information to inexperienced traders but adds little information to experienced dealers. This implies that the certification may reduce the information asymmetry between informed and uninformed parties. Second, compared with the incumbent, new entrants adopt more precise signals and use finer grading cutoffs to differentiate from the incumbent. Third, our measured differentiated grading cutoffs map consistently into prevailing market prices, suggesting that the market recognizes differences across multiple grading criteria." ("JEL" D8, C93) Copyright (c) 2008 Western Economic Association International.

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Bibliographic Info

Article provided by Western Economic Association International in its journal Economic Inquiry.

Volume (Year): 48 (2010)
Issue (Month): 1 (01)
Pages: 104-122

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Handle: RePEc:bla:ecinqu:v:48:y:2010:i:1:p:104-122

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References

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  1. Glenn Harrison & John List, 2004. "Field experiments," Artefactual Field Experiments, The Field Experiments Website 00058, The Field Experiments Website.
  2. Grossman, Sanford J, 1981. "The Informational Role of Warranties and Private Disclosure about Product Quality," Journal of Law and Economics, University of Chicago Press, University of Chicago Press, vol. 24(3), pages 461-83, December.
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Citations

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Cited by:
  1. John A. List, 2005. "The Behavioralist Meets the Market: Measuring Social Preferences and Reputation Effects in Actual Transactions," NBER Working Papers 11616, National Bureau of Economic Research, Inc.
  2. Steven D. Levitt & John A. List, 2008. "Field Experiments in Economics: The Past, The Present, and The Future," NBER Working Papers 14356, National Bureau of Economic Research, Inc.
  3. Gary E Bolton & Axel Ockenfels, 2007. "Does Laboratory Trading Mirror Behavior in Real World Markets? Fair Bargaining and Competitive Bidding on EBay," Working Paper Series in Economics, University of Cologne, Department of Economics 36, University of Cologne, Department of Economics, revised 24 Feb 2011.
  4. Vandana Ramachandran & Siva Viswanathan & Sanjay Gosain, 2007. "The Impact of Online Information on the Purchase of Certified Used Cars," Working Papers, NET Institute 07-37, NET Institute.
  5. Shyam Sunder & Karim Jamal, 2006. "Regulation, Competition and Independence in a Certification Society: Financial Reports Vs. Baseball Cards," Yale School of Management Working Papers, Yale School of Management amz2578, Yale School of Management, revised 01 Jun 2007.
  6. Michael Richards, 2012. "Using the economics of certification to improve the safety and quality of male circumcision in developing countries," Applied Health Economics and Health Policy, Springer, Springer, vol. 10(2), pages 77-85, March.
  7. Tom Wilkening, 2009. "The Informational Properties of Institutions: An Experimental Study of Persistence in Markets with Certification," Department of Economics - Working Papers Series, The University of Melbourne 1087, The University of Melbourne.

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