Coarse Grades: Informing the Public by Withholding Information
Certifiers of quality often report only coarse grades to the public despite having measured quality more finely, e.g., "Pass" or "Certified" instead of "73 out of 100". Why? We show that coarse grades result in more information being provided to the public because the coarseness encourages those of middling quality to apply for certification. Dropping exact grading in favor of the best coarse grading scheme always reduces public uncertainty because the extra participation outweighs the coarser reporting. In some circumstances, the coarsest meaningful grading scheme, pass-fail grading, is the most informative.
|Date of creation:||Oct 2012|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://kelley.iu.edu/bepp/Email:
More information through EDIRC
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.:
- Crawford, Vincent P & Sobel, Joel, 1982.
"Strategic Information Transmission,"
Econometric Society, vol. 50(6), pages 1431-51, November.
- William Chan & Hao Li & Wing Suen, 2005.
"A Signaling Theory of Grade Inflation,"
tecipa-222, University of Toronto, Department of Economics.
- Morgan, J. & Stocken, P., 1998.
"An Analysis of Stock Recommendations,"
204, Princeton, Woodrow Wilson School - Public and International Affairs.
- Archishman Chakraborty & Rick Harbaugh, 2004.
"Comparative Cheap Talk,"
2004-08, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
- Ostrovsky, Michael & Schwarz, Michael, 2007.
"Information Disclosure and Unraveling in Matching Markets,"
1965, Stanford University, Graduate School of Business.
- Michael Ostrovsky & Michael Schwarz, 2010. "Information Disclosure and Unraveling in Matching Markets," American Economic Journal: Microeconomics, American Economic Association, vol. 2(2), pages 34-63, May.
- Michael Ostrovsky & Michael Schwarz, 2008. "Information Disclosure and Unraveling in Matching Markets," NBER Working Papers 13766, National Bureau of Economic Research, Inc.
- Benny Moldovanu & Aner Sela & Xianwen Shi, 2007.
"Contests for Status,"
Journal of Political Economy,
University of Chicago Press, vol. 115, pages 338-363.
- Benny Moldovanu & Aner Sela & Xianwen Shi, 2006. "Contests For Status," Working Papers 0604, Ben-Gurion University of the Negev, Department of Economics.
- Moldovanu, Benny & Sela, Aner & Shi, Xianwen, 2005. "Contests for Status," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 139, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
- Bénabou, Roland & Tirole, Jean, 2004.
"Incentives and Prosocial Behaviour,"
CEPR Discussion Papers
4633, C.E.P.R. Discussion Papers.
- Bénabou, Roland & Tirole, Jean, 2003. "Incentives and Prosocial Behavior," IDEI Working Papers 389, Institut d'Économie Industrielle (IDEI), Toulouse, revised Jan 2006.
- Roland Bénabou & Jean Tirole, 2005. "Incentives and Prosocial Behavior," NBER Working Papers 11535, National Bureau of Economic Research, Inc.
- Roland Bénabou & Jean Tirole, 2004. "Incentives and Prosocial Behavior," Working Papers 137, Princeton University, Woodrow Wilson School of Public and International Affairs, Discussion Papers in Economics..
- Benabou, Roland & Tirole, Jean, 2005. "Incentives and Prosocial Behavior," IZA Discussion Papers 1695, Institute for the Study of Labor (IZA).
- Emmanuel Farhi & Josh Lerner & Jean Tirole, 2008.
"Fear of Rejection? Tiered Certification and Transparency,"
NBER Working Papers
14457, National Bureau of Economic Research, Inc.
- Emmanuel Farhi & Josh Lerner & Jean Tirole, 2013. "Fear of rejection? Tiered certification and transparency," RAND Journal of Economics, RAND Corporation, vol. 44(4), pages 610-631, December.
- Emmanuel Farhi & Josh Lerner & Jean Tirole, . "Fear of Rejection? Tiered Certification and Transparency," Working Paper 78856, Harvard University OpenScholar.
- Emir Kamenica & Matthew Gentzkow, 2011. "Bayesian Persuasion," American Economic Review, American Economic Association, vol. 101(6), pages 2590-2615, October.
When requesting a correction, please mention this item's handle: RePEc:iuk:wpaper:2012-06. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Rick Harbaugh)
If references are entirely missing, you can add them using this form.