That's news to me! Information revelation in professional certification markets

Ginger Zhe Jin, Andrew Kato, John A. List

Research output: Contribution to journalArticleResearchpeer-review

7 Citations (Scopus)

Abstract

Using sportscard grading as an example, we employ field experiments to investigate the informational role of professional certifiers. Empirical results suggest three patterns: first, the grading certification provided by the first professional certifier offers new information to inexperienced traders but adds little information to experienced dealers. This implies that the certification may reduce the information asymmetry between informed and uninformed parties. Second, compared with the incumbent, new entrants adopt more precise signals and use finer grading cutoffs to differentiate from the incumbent. Third, our measured differentiated grading cutoffs map consistently into prevailing market prices, suggesting that the market recognizes differences across multiple grading criteria.

Original languageEnglish
Pages (from-to)104-122
Number of pages19
JournalEconomic Inquiry
Volume48
Issue number1
DOIs
Publication statusPublished - 2010
Externally publishedYes

Cite this