Disease Forecasts and Livestock Health Disclosure: A Shepherd's Dilemma

13 Pages Posted: 6 Apr 2020

See all articles by Glenn Sheriff

Glenn Sheriff

Government of the United States of America - Environmental Protection Agency (EPA)

Daniel Osgood

Columbia University

Date Written: April 2010

Abstract

We analyze how to induce sellers to disclose food safety. With repeated interactions and safety correlated over time, cash transfers alone do not ensure disclosure. Perfect, but costly, testing ensures disclosure with a complex lottery that may be difficult to implement in practice. In contrast, even a noisy quality forecast allows the buyer to induce perfect disclosure with a simple pricing scheme. Forecast introduction may benefit or harm sellers. After introduction, sellers may suffer from increases in forecast precision. As an illustration, we cast our model in the context of Rift Valley fever in an East African livestock market.

Keywords: adverse selection, product safety, noisy signals, credence goods, climate forecast

Suggested Citation

Sheriff, Glenn and Osgood, Daniel, Disease Forecasts and Livestock Health Disclosure: A Shepherd's Dilemma (April 2010). American Journal of Agricultural Economics, Vol. 92, Issue 3, pp. 776-788, 2010, Available at SSRN: https://ssrn.com/abstract=3569174 or http://dx.doi.org/10.1093/ajae/aap042

Glenn Sheriff (Contact Author)

Government of the United States of America - Environmental Protection Agency (EPA)

Ariel Rios Building
1200 Pennsylvania Ave., N.W.
Washington, DC 20460
United States

Daniel Osgood

Columbia University ( email )

3022 Broadway
New York, NY 10027
United States

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