Informational opacity and honest certification

Pollrich, Martin und Wagner, Lilo (2014): Informational opacity and honest certification. SFB/TR 15 Discussion Paper No. 481

Abstract

This paper studies the interaction of information disclosure and reputational concerns in certification markets. We argue that by revealing less precise information a certifier reduces the threat of capture. Opaque disclosure rules may reduce profits but also constrain feasible bribes. For large discount factors a certifier is unconstrained in the choice of a disclosure rule and full disclosure maximizes profits. For intermediate discount factors, only less precise, such as noisy, disclosure rules are implementable. Our results suggest that contrary to the common view, coarse disclosure may be socially desirable. A ban may provoke market failure especially in industries where certifier reputational rents are low.

• Dokumententyp: Paper
• Keywords: Certification; Bribery; Reputation
• Fakultät: Sonderforschungsbereiche > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems ; Sonderforschungsbereiche > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems > A7 - Auktionen, Anreizprobleme und Wettbewerb
• Themengebiete: 300 Sozialwissenschaften > 330 Wirtschaft
• JEL Classification: L15, D82, L14, L11
• Sprache: Englisch