Testing, Disclosure and Approval
Publikation: Working paper › Forskning
Approval committees selecting candidates or certifying products often base their decisions on a mixture of information, some of which is voluntarily disclosed by applicants, and some which they acquire first-hand, by way of tests or otherwise. We examine the interplay between approvers' first-hand information acquisition and applicants' voluntary disclosure. We show that access to cheaper or more accurate information on the part of approvers might impair disclosure by applicants, resulting in overall lower social welfare and quality of certification. In such cases, the commitment of approvers to simple testing rules can play an important role towards improving social welfare.
|Status||Udgivet - 6 apr. 2019|
|Navn||SSRN: Social Science Research Network|
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