Logo Logo
Switch Language to German

Strausz, Roland (June 2010): Separating Equilibria with Imperfect Certification. SFB/TR 15 Discussion Paper No. 324 [PDF, 189kB]


Viscusi (1978) shows how, in markets with quality uncertainty, perfect certification results in separation from top down due to an unraveling process similar to Akerlof (1970). De and Nabar (1991) argue that imperfect certification prevents unraveling so that equilibria with full separation do not exist. This note shows that, if one considers the buyers' buying decision explicitly, a separating equilibrium with imperfect certification does exist.

Actions (login required)

View Item View Item