That's News to Me! Information Revelation in Professional Certification Markets

Ginger Zhe Jin, Andrew Norio Kato and John List ()

No 12390, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Using sportscard grading as an example, we employ field experiments to investigate empirically the informational role of professional certifiers. In the past 20 years, professional grading of sportscards has evolved in a way that provides a unique opportunity to measure the information provision of a monopolist certifier and that of subsequent entrants. Empirical results suggest three patterns: 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.

JEL-codes: D8 C93 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com and nep-exp
Date: 2006-07
Note: IO LS
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