Optimal quality certification

Andriy Zapechelnyuk

Optimal quality certification

Andriy Zapechelnyuk

Research output: Working paper › Discussion paper

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
Place of Publication	St Andrews
Publisher	University of St Andrews
Number of pages	16
Publication status	Published - 21 Oct 2019

Publication series

Name	School of Economics and Finance Discussion Paper
Publisher	University 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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Zapechelnyuk_EconDiscPap_1904
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title = "Optimal quality certification",

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.",

keywords = "Certification, Bayesian persuasion, Information disclosure, Information design, Delegation, Moral hazard, Career concerns",

author = "Andriy Zapechelnyuk",

note = "Financial support from the Economic and Social Research Council Grant ES/N01829X/1 is gratefully acknowledged.",

year = "2019",

month = oct,

day = "21",

language = "English",

series = "School of Economics and Finance Discussion Paper",

publisher = "University of St Andrews",

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type = "WorkingPaper",

institution = "University of St Andrews",

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AU - Zapechelnyuk, Andriy

N1 - Financial support from the Economic and Social Research Council Grant ES/N01829X/1 is gratefully acknowledged.

PY - 2019/10/21

Y1 - 2019/10/21

N2 - 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.

AB - 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.

KW - Certification

KW - Bayesian persuasion

KW - Information disclosure

KW - Information design

KW - Delegation

KW - Moral hazard

KW - Career concerns

UR - https://ideas.repec.org/p/san/wpecon/1904.html

M3 - Discussion paper

T3 - School of Economics and Finance Discussion Paper

BT - Optimal quality certification

PB - University of St Andrews

CY - St Andrews

ER -

Optimal quality certification

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Theoretical Foundations: Theoretical foundations and design of persuasion mechanism

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Optimal quality certification

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Keywords

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Theoretical Foundations: Theoretical foundations and design of persuasion mechanism

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