In a market where sellers solicit certification to overcome asymmetric information, we show that the profit of a monopolistic certifier can be hump-shaped in its reputation for accuracy: a higher accuracy attracts high-quality sellers but sometimes repels low-quality sellers. As a consequence,...

This paper studies how legal liability due to negligence can weaken or strengthen an auditor's reputation concerns in the client market to provide high audit effort. A negligence liability rule relies on auditing standards to provide a threshold for the level of due care. When the negligence...

In this paper, I investigate matching problems where priorities and preferences are misaligned. In the case of centralized college admissions, students are matched based on their test scores in standardized tests (priorities), a noisy realization of their aptitudes (colleges' preferences) due to...

This paper presents a theoretical model of competition between information intermediaries applied to credit rating industry. Sellers rely on intermediaries to credibly communicate their quality to buyers. Intermediaries are strategic and compete in fees as well as their certification standards...

I compare certification and self-regulation, two widely used quality assurance mechanisms in markets where consumers do not observe the quality of goods. Certification is a mechanism in which an external firm offers a certificate to producers who undergo a testing procedure, issues the...

In imperfectly competitive labor markets returns to skills are lower than their productivity and educational standards may play an important role in stimulating students to provide effort. We propose a principal-agent model to analyze the determinants of student effort and the setting of...

We compare certification to a minimum quality standard (MQS) policy in a duopolistic industry where firms incur quality-dependent fixed costs and only a fraction of consumers observes the quality of the offered goods. Compared to the unregulated outcome, both profits and social welfare would...

When consumers are unsure of the exact standard that a quality certificate or label represents, they must infer the difficulty of the standard in part from observing which firms adopt the label. Key results from the certification and disclosure literatures are thereby altered. First, consumers...

In models of certification possible restrictions on the nature of the fee structures are commonly analyzed. We show that they are irrelevant for the certifier's ability to maximize profits and trade efficiency. Our results establish that certification schemes involve two substitutable...

Restrictions on certifiers' fee structures are irrelevant for maximizing their profits and trade efficiency, and for the implementability of (monotone) distributions of rents. The irrelevance results exploit that certification schemes involve two substitutable dimensions-the fee structure and...