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The Optimal Choice of Pre-launch Reviewer : How Best to Transmit Information using Tests and Conditional Pricing

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Author Info
Gill, David (University of Southampton)
Sgroi, Daniel (University of Warwick)

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Abstract

A principal who knows her type can face public testing to help attract endorsements from agents. Tests are pass/fail and have an innate toughness (bias) corresponding to a trade-off between the higher probability of passing a softer test and the greater impact on agents’ beliefs from passing a tougher test. Conditional on the test result, the principal also selects the price of endorsement. The principal always wants to be tested, and chooses the toughest or softest test available depending upon the precision of the agents’ and tests’ information. Applications abound in industrial organization, political economy and labor economics.

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File URL: http://www2.warwick.ac.uk/fac/soc/economics/research/workingpapers/publications/twerp_877.pdf
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Publisher Info
Paper provided by University of Warwick, Department of Economics in its series The Warwick Economics Research Paper Series (TWERPS) with number 877.

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Length: 34 pages
Date of creation: 2008
Date of revision:
Handle: RePEc:wrk:warwec:877

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Related research
Keywords: tests ; reviewers ; Bayesian learning ; information transmission ; bias; marketing;

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Find related papers by JEL classification:
D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information
D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    Other versions:
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    Other versions:
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    Other versions:
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    Other versions:
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    Other versions:
  10. Josh Lerner & Jean Tirole, 2006. "A Model of Forum Shopping," American Economic Review, American Economic Association, vol. 96(4), pages 1091-1113, September. [Downloadable!]
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    Other versions:
  14. Taylor, Curtis R, 1999. "Time-on-the-Market as a Sign of Quality," Review of Economic Studies, Blackwell Publishing, vol. 66(3), pages 555-78, July. [Downloadable!] (restricted)
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  17. Ramon Caminal & Xavier Vives, 1999. "Price Dynamics and Consumer Learning," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 8(1), pages 95-131, 03. [Downloadable!] (restricted)
    Other versions:
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