THAT’S NEWS TO ME! INFORMATION REVELATION IN PROFESSIONAL CERTIFICATION MARKETS

Ginger Zhe Jin, Andrew Kato and John List

Economic Inquiry, 2010, vol. 48, issue 1, 104-122

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. (JEL D8, C93)

Date: 2010
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https://doi.org/10.1111/j.1465-7295.2008.00136.x

Related works:
Working Paper: That's news to me! information revelation in professional certification markets (2006)
Working Paper: That's News to Me! Information Revelation in Professional Certification Markets (2006)
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