Optimal quality certification

Andriy Zapechelnyuk

doi:10.1257/aeri.20190387

Optimal quality certification

Andriy Zapechelnyuk

Research output: Contribution to journal › Article › peer-review

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 language	English
Pages (from-to)	161-176
Journal	American Economic Review: Insights
Volume	2
Issue number	2
DOIs	https://doi.org/10.1257/aeri.20190387
Publication status	Published - 1 Jun 2020

Keywords

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

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10.1257/aeri.20190387

Zapechelnyuk_2019_AERI_Certification_AAM
Copyright 2020 American Economic Association. All rights reserved. This work has been made available online in accordance with publisher policies or with permission. Permission for further reuse of this content should be sought from the publisher or the rights holder. This is the author created accepted manuscript following peer review and may differ slightly from the final published version. The final published version of this work is available at https://doi.org/10.1257/aeri.20190387
Accepted author manuscript, 277 KB

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Theoretical Foundations: Theoretical foundations and design of persuasion mechanism
Zapechelnyuk, A. (PI)
Economic and Social Research Council
19/06/17 → 18/12/20
Project: Standard

Cite this

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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.",

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KW - Information disclosure

KW - Information design

KW - Delegation

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KW - Career concerns

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Optimal quality certification

Abstract

Keywords

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Theoretical Foundations: Theoretical foundations and design of persuasion mechanism

Cite this