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THAT’S NEWS TO ME! INFORMATION REVELATION IN PROFESSIONAL CERTIFICATION MARKETS
Author(s) -
ZHE JIN GINGER,
KATO ANDREW,
LIST JOHN A.
Publication year - 2010
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.2008.00136.x
Subject(s) - grading (engineering) , certification , information asymmetry , economics , revelation , microeconomics , business , marketing , management , civil engineering , engineering , art , literature
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)