Optimal quality certification

Andriy Zapechelnyuk

    Research output: Working paperDiscussion paper

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    Abstract

    Quality certification not only informs consumers, but also stimulates producers to supply better quality products. We study a problem of quality certification in a moral hazard setting. We show that, under standard assumptions, simple certification systems, such as quality assurance rule and pass-fail rule, are optimal. Our solution method involves interpreting the certification problem as a delegation problem.
    Original languageEnglish
    Place of PublicationSt Andrews
    PublisherUniversity of St Andrews
    Number of pages16
    Publication statusPublished - 21 Oct 2019

    Publication series

    NameSchool of Economics and Finance Discussion Paper
    PublisherUniversity of St Andrews
    No.1904
    ISSN (Print)0962-4031
    ISSN (Electronic)2055-303X

    Keywords

    • Certification
    • Bayesian persuasion
    • Information disclosure
    • Information design
    • Delegation
    • Moral hazard
    • Career concerns

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