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

42 Pages Posted: 3 Aug 2006 Last revised: 10 Nov 2022

See all articles by Ginger Zhe Jin

Ginger Zhe Jin

University of Maryland - Department of Economics; National Bureau of Economic Research (NBER)

Andrew Kato

University of Maryland - Department of Economics

John A. List

University of Chicago - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: July 2006

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.

Suggested Citation

Jin, Ginger Zhe and Kato, Andrew and List, John A., That's News to Me! Information Revelation in Professional Certification Markets (July 2006). NBER Working Paper No. w12390, Available at SSRN: https://ssrn.com/abstract=921556

Ginger Zhe Jin (Contact Author)

University of Maryland - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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Andrew Kato

University of Maryland - Department of Economics ( email )

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John A. List

University of Chicago - Department of Economics ( email )

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Chicago, IL 60637
United States