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Disease Forecasts and Livestock Health Disclosure: A Shepherd's Dilemma
Author(s) -
Sheriff Glenn,
Osgood Daniel
Publication year - 2010
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.1093/ajae/aap042
Subject(s) - harm , dilemma , context (archaeology) , livestock , quality (philosophy) , lottery , business , cash , economics , actuarial science , microeconomics , finance , psychology , social psychology , paleontology , philosophy , ecology , epistemology , biology
We analyze how to induce sellers to disclose food safety. With repeated interactions and safety correlated over time, cash transfers alone do not ensure disclosure. Perfect, but costly, testing ensures disclosure with a complex lottery that may be difficult to implement in practice. In contrast, even a noisy quality forecast allows the buyer to induce perfect disclosure with a simple pricing scheme. Forecast introduction may benefit or harm sellers. After introduction, sellers may suffer from increases in forecast precision. As an illustration, we cast our model in the context of Rift Valley fever in an East African livestock market.

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