Informational opacity and honest certification

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: SFB/TR 15 Discussion Paper ; No. 481

Classification and Topics

• Classification: Wirtschaft ; Information and Product Quality; Standardization and Compatibility ; Asymmetric and Private Information; Mechanism Design ; Transactional Relationships; Contracts and Reputation; Networks ; Production, Pricing, and Market Structure; Size Distribution of Firms
• Subject: Certification ; Bribery ; Reputation

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Pollrich, Martin ; Wagner, Lilo
• Event: Veröffentlichung
• (who): Sonderforschungsbereich/Transregio 15 - Governance and the Efficiency of Economic Systems (GESY)
• (where): München
• (when): 2014

Further information

• DOI: doi:10.5282/ubm/epub.21606
• Handle: http://hdl.handle.net/10419/103906
• URN: urn:nbn:de:bvb:19-epub-21606-0
• Last update: 10.03.2025, 11:46 AM CET