American Economic Journal:
Microeconomics
ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)
Incomplete Disclosure: Evidence of Signaling and Countersignaling
American Economic Journal: Microeconomics
vol. 10,
no. 1, February 2018
(pp. 41–66)
(Complimentary)
Abstract
In 2011, Maricopa County adopted voluntary restaurant hygiene grade cards (A, B, C, D). Using inspection results between 2007 and 2013, we show that only 58 percent of the subsequent inspections led to online grade posting. Although the disclosure rate in general declines with inspection outcome, higher-quality A restaurants are less likely to disclose than lower-quality As. After examining potential explanations, we believe the observed pattern is best explained by a mixture of signaling and countersignaling: the better A restaurants use nondisclosure as a countersignal, while worse As and better Bs use disclosure to stand out from the other restaurants.Citation
Bederson, Benjamin B., Ginger Zhe Jin, Phillip Leslie, Alexander J. Quinn, and Ben Zou. 2018. "Incomplete Disclosure: Evidence of Signaling and Countersignaling." American Economic Journal: Microeconomics, 10 (1): 41–66. DOI: 10.1257/mic.20150178Additional Materials
JEL Classification
- D82 Asymmetric and Private Information; Mechanism Design
- H75 State and Local Government: Health; Education; Welfare; Public Pensions
- I18 Health: Government Policy; Regulation; Public Health
- L15 Information and Product Quality; Standardization and Compatibility
- L83 Sports; Gambling; Restaurants; Recreation; Tourism
- L88 Industry Studies: Services: Government Policy
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