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That's News to Me! Information Revelation in Professional Certification Markets

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Listed:
  • Ginger Zhe Jin
  • Andrew Kato
  • John A. List

Abstract

Using sportscard grading as an example, we employ field experiments to investigate empirically the informational role of professional certifiers. In the past 20 years, professional grading of sportscards has evolved in a way that provides a unique opportunity to measure the information provision of a monopolist certifier and that of subsequent entrants. Empirical results suggest three patterns: 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.

Suggested Citation

  • Ginger Zhe Jin & Andrew Kato & John A. List, 2006. "That's News to Me! Information Revelation in Professional Certification Markets," NBER Working Papers 12390, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:12390
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    Cited by:

    1. Tom Wilkening, 2009. "The Informational Properties of Institutions: An Experimental Study of Persistence in Markets with Certification," Department of Economics - Working Papers Series 1087, The University of Melbourne.
    2. Kevin Chung & Keehyung Kim & Noah Lim, 2020. "Social Structures and Reputation in Expert Review Systems," Management Science, INFORMS, vol. 66(7), pages 3249-3276, July.
    3. John A. List, 2006. "The Behavioralist Meets the Market: Measuring Social Preferences and Reputation Effects in Actual Transactions," Journal of Political Economy, University of Chicago Press, vol. 114(1), pages 1-37, February.
    4. John List, 2022. "2021 Summary Data of Natural Field Experiments Published on Fieldexperiments.com," Natural Field Experiments 00747, The Field Experiments Website.
    5. Jamal, Karim & Sunder, Shyam, 2011. "Is mandated independence necessary for audit quality?," Accounting, Organizations and Society, Elsevier, vol. 36(4), pages 284-292.
    6. Eszter Czibor & David Jimenez‐Gomez & John A. List, 2019. "The Dozen Things Experimental Economists Should Do (More of)," Southern Economic Journal, John Wiley & Sons, vol. 86(2), pages 371-432, October.
    7. Ken Hendricks & Alan Sorensen, 2009. "Information and the Skewness of Music Sales," Journal of Political Economy, University of Chicago Press, vol. 117(2), pages 324-369, April.
    8. Bradley, Michael & De Lira Salvatierra, Irving & Gulati, Mitu, 2014. "Lawyers: Gatekeepers of the sovereign debt market?," International Review of Law and Economics, Elsevier, vol. 38(S), pages 150-168.
    9. Matilde Giaccherini & David Herberich & David Jimenez-Gomez & John List & Giovanni Ponti & Michael Price, 2020. "Are Economics and Psychology Complements in Household Technology Diffusion? Evidence from a Natural Field Experiment," Natural Field Experiments 00713, The Field Experiments Website.
    10. Hirotsugu Uchida & Cathy A. Roheim & Hiroki Wakamatsu & Christopher M. Anderson, 2014. "Do Japanese consumers care about sustainable fisheries? Evidence from an auction of ecolabelled seafood," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 58(2), pages 263-280, April.
    11. Vandana Ramachandran & Siva Viswanathan & Sanjay Gosain, 2007. "The Impact of Online Information on the Purchase of Certified Used Cars," Working Papers 07-37, NET Institute.
    12. Levitt, Steven D. & List, John A., 2009. "Field experiments in economics: The past, the present, and the future," European Economic Review, Elsevier, vol. 53(1), pages 1-18, January.
    13. John A List & Ian Muirex & Devin Pope & Gregory Sun, 2023. "Left-Digit Bias at Lyft," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 90(6), pages 3186-3237.
    14. Anagol, Santosh, 2017. "Adverse selection in asset markets: Theory and evidence from the Indian market for cows," Journal of Development Economics, Elsevier, vol. 129(C), pages 58-72.
    15. Bolton, Gary E. & Ockenfels, Axel, 2014. "Does laboratory trading mirror behavior in real world markets? Fair bargaining and competitive bidding on eBay," Journal of Economic Behavior & Organization, Elsevier, vol. 97(C), pages 143-154.
    16. Brian Albrecht & Omar Al-Ubaydli & Peter Boettke, 2022. "Testing the Hayek hypothesis: Recent theoretical and experimental evidence," Artefactual Field Experiments 00759, The Field Experiments Website.
    17. John List, 2021. "2021 Summary Data of Artefactual Field Experiments Published on Fieldexperiments.com," Artefactual Field Experiments 00749, The Field Experiments Website.
    18. 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, vol. 10(2), pages 77-85, March.
    19. Shyam Sunder & Karim Jamal, 2006. "Regulation, Competition and Independence in a Certification Society: Financial Reports Vs. Baseball Cards," Yale School of Management Working Papers amz2578, Yale School of Management, revised 01 Jun 2007.

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    More about this item

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments

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