Testing, Disclosure and Approval

TY - UNPB

T1 - Testing, Disclosure and Approval

AU - Bizotto, Jacopo

AU - Rudiger, Jesper

AU - Vigier, Adrien

PY - 2019/4/6

Y1 - 2019/4/6

N2 - 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.

AB - 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.

KW - Faculty of Social Sciences

KW - Certification

KW - Testing

KW - Information Acquisition

KW - Disclosure

KW - C72

KW - D82

KW - D83

KW - G24

KW - G28

U2 - 10.2139/ssrn.2868042

DO - 10.2139/ssrn.2868042

M3 - Working paper

T3 - SSRN: Social Science Research Network

BT - Testing, Disclosure and Approval

ER -