Test Me If You Can—Providing Optimal Information for Consumers Through a Novel Certification Mechanism

Ulrike Vollstädt (), Patrick Imcke, Franziska Brendel and Christiane Ehses-Friedrich
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Ulrike Vollstädt: Faculty of Economics and Management, Otto von Guericke University Magdeburg, 39106 Magdeburg, Germany
Patrick Imcke: Faculty of Business Administration and Economics, University of Duisburg-Essen, 45127 Essen, Germany
Franziska Brendel: Faculty of Business Administration and Economics, University of Duisburg-Essen, 45127 Essen, Germany
Christiane Ehses-Friedrich: Faculty of Economics and Business Administration, Friedrich Schiller University Jena, 07743 Jena, Germany

Games, 2025, vol. 16, issue 5, 1-64

Abstract: Certifiers such as Stiftung Warentest (Germany), Which? (UK), and Consumer Reports (US) reduce asymmetric information between buyers and sellers by providing credible information about product quality. However, due to their limited testing capacities, they face a set selection problem and test only a subset of all available product models. We show theoretically that, under any current mechanism to select product models for testing, buyers always end up buying suboptimal product models, unless all product models which would be sold under complete information (or all but the overall cheapest one) happen to be tested. Instead, we propose a novel mechanism based on voluntary disclosure, but with the same testing capacity, which always yields the maximum possible consumer surplus and thus weakly dominates any current mechanism. Furthermore, we confirm in a controlled laboratory experiment that our mechanism significantly increases consumer surplus.

Keywords: asymmetric information; product quality; certification; information disclosure; consumer surplus (search for similar items in EconPapers)
JEL-codes: C C7 C70 C71 C72 C73 (search for similar items in EconPapers)
Date: 2025
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