[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/22710.html
   My bibliography  Save this paper

Incomplete Disclosure: Evidence of Signaling and Countersignaling

Author

Listed:
  • Benjamin B. Bederson
  • Ginger Zhe Jin
  • Phillip Leslie
  • Alexander J. Quinn
  • Ben Zou
Abstract
In 2011, Maricopa County adopted voluntary restaurant hygiene grade cards (A, B, C, D). Using inspections 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.

Suggested Citation

  • Benjamin B. Bederson & Ginger Zhe Jin & Phillip Leslie & Alexander J. Quinn & Ben Zou, 2016. "Incomplete Disclosure: Evidence of Signaling and Countersignaling," NBER Working Papers 22710, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:22710
    Note: IO
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w22710.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Iván Marinovic & Andrzej Skrzypacz & Felipe Varas, 2018. "Dynamic Certification and Reputation for Quality," American Economic Journal: Microeconomics, American Economic Association, vol. 10(2), pages 58-82, May.
    2. Grossman, Sanford J, 1981. "The Informational Role of Warranties and Private Disclosure about Product Quality," Journal of Law and Economics, University of Chicago Press, vol. 24(3), pages 461-483, December.
    3. Paul R. Milgrom, 1981. "Good News and Bad News: Representation Theorems and Applications," Bell Journal of Economics, The RAND Corporation, vol. 12(2), pages 380-391, Autumn.
    4. David Dranove & Ginger Zhe Jin, 2010. "Quality Disclosure and Certification: Theory and Practice," Journal of Economic Literature, American Economic Association, vol. 48(4), pages 935-963, December.
    5. Ginger Zhe Jin & Michael Luca & Daniel Martin, 2021. "Is No News (Perceived As) Bad News? An Experimental Investigation of Information Disclosure," American Economic Journal: Microeconomics, American Economic Association, vol. 13(2), pages 141-173, May.
    6. Steven Matthews & Andrew Postlewaite, 1985. "Quality Testing and Disclosure," RAND Journal of Economics, The RAND Corporation, vol. 16(3), pages 328-340, Autumn.
    7. Nick Feltovich & Richmond Harbaugh & Ted To, 2002. "Too Cool for School? Signalling and Countersignalling," RAND Journal of Economics, The RAND Corporation, vol. 33(4), pages 630-649, Winter.
    8. Mathios, Alan D, 2000. "The Impact of Mandatory Disclosure Laws on Product Choices: An Analysis of the Salad Dressing Market," Journal of Law and Economics, University of Chicago Press, vol. 43(2), pages 651-677, October.
    9. Michael J. Fishman & Kathleen M. Hagerty, 2003. "Mandatory Versus Voluntary Disclosure in Markets with Informed and Uninformed Customers," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 19(1), pages 45-63, April.
    10. Oliver Board, 2009. "Competition And Disclosure," Journal of Industrial Economics, Wiley Blackwell, vol. 57(1), pages 197-213, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Montero, Maria & Sheth, Jesal D., 2021. "Naivety about hidden information: An experimental investigation," Journal of Economic Behavior & Organization, Elsevier, vol. 192(C), pages 92-116.
    2. Schmitt, Stefanie Y. & Bruckner, Dominik, 2023. "Unaware consumers and disclosure of deficiencies," Games and Economic Behavior, Elsevier, vol. 142(C), pages 1018-1042.
    3. Hisayuki Yoshimoto & Andriy Zapechelnyuk, 2019. "Are There 'Ratatouille' Restaurants? On Anticorrelation of Food Quality and Hygiene," Discussion Paper Series, School of Economics and Finance 202001, School of Economics and Finance, University of St Andrews, revised 05 Mar 2020.
    4. Bo Cowgill & Amanda Agan & Laura K. Gee, 2024. "The Gender Disclosure Gap: Salary History Bans Unravel When Men Volunteer Their Income," Organization Science, INFORMS, vol. 35(5), pages 1571-1588, September.
    5. Jeroen Nieboer, 2022. "Positional enhancement in effort-based social comparisons," Discussion Papers 2022-02, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    6. Jeanne Hagenbach & Charlotte Saucet, 2024. "Motivated Skepticism," Working Papers hal-03770685, HAL.
    7. Makofske, Matthew P., 2024. "Anticipated Inspection, Inhibited Detection, and Diminished Deterrence," 2024 Annual Meeting, July 28-30, New Orleans, LA 343681, Agricultural and Applied Economics Association.
    8. Harbaugh, Richmond & To, Theodore, 2020. "False modesty: When disclosing good news looks bad," Journal of Mathematical Economics, Elsevier, vol. 87(C), pages 43-55.
    9. Ginger Zhe Jin & Michael Luca & Daniel Martin, 2022. "Complex Disclosure," Management Science, INFORMS, vol. 68(5), pages 3236-3261, May.
    10. Jeanne Hagenbach & Charlotte Saucet, 2024. "Motivated Skepticism," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-03770685, HAL.
    11. Tom Lane & Minghai Zhou, 2022. "Failure of unravelling theory? A natural field experiment on voluntary quality disclosure," Discussion Papers 2022-17, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    12. Benndorf, Volker & Kübler, Dorothea & Normann, Hans-Theo, 2022. "Behavioral forces driving information unraveling," Discussion Papers, Research Unit: Market Behavior SP II 2022-206, WZB Berlin Social Science Center.
    13. Han Zhu & Yimin Yu & Saibal Ray, 2021. "Quality Disclosure Strategy under Customer Learning Opportunities," Production and Operations Management, Production and Operations Management Society, vol. 30(4), pages 1136-1153, April.
    14. Jeanne Hagenbach & Charlotte Saucet, 2024. "Motivated Skepticism," SciencePo Working papers Main hal-03770685, HAL.
    15. Benndorf, Volker & Kübler, Dorothea & Normann, Hans-Theo, 2023. "Behavioral forces driving information unraveling," Discussion Papers, Research Unit: Market Behavior SP II 2023-207, WZB Berlin Social Science Center.
    16. Makofske, Matthew, 2024. "Anticipated Monitoring, Inhibited Detection, and Diminished Deterrence," MPRA Paper 120044, University Library of Munich, Germany.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Schmitt, Stefanie Y. & Bruckner, Dominik, 2023. "Unaware consumers and disclosure of deficiencies," Games and Economic Behavior, Elsevier, vol. 142(C), pages 1018-1042.
    2. Ginger Zhe Jin & Michael Luca & Daniel Martin, 2022. "Complex Disclosure," Management Science, INFORMS, vol. 68(5), pages 3236-3261, May.
    3. Ginger Zhe Jin & Michael Luca & Daniel Martin, 2021. "Is No News (Perceived As) Bad News? An Experimental Investigation of Information Disclosure," American Economic Journal: Microeconomics, American Economic Association, vol. 13(2), pages 141-173, May.
    4. Tianle Song, 2022. "Quality Disclosure and Product Selection," Journal of Industrial Economics, Wiley Blackwell, vol. 70(2), pages 323-346, June.
    5. Tom Lane & Minghai Zhou, 2022. "Failure of unravelling theory? A natural field experiment on voluntary quality disclosure," Discussion Papers 2022-17, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    6. Deversi, Marvin & Ispano, Alessandro & Schwardmann, Peter, 2021. "Spin doctors: An experiment on vague disclosure," European Economic Review, Elsevier, vol. 139(C).
    7. Arnaud Dellis & Mandar Oak, 2020. "Subpoena power and informational lobbying," Journal of Theoretical Politics, , vol. 32(2), pages 188-234, April.
    8. Dmitry Lubensky & Eric Schmidbauer, 2020. "Free Product Trials: Disclosing Quality And Match Value," Economic Inquiry, Western Economic Association International, vol. 58(4), pages 1565-1576, October.
    9. V. Joseph Hotz & Mo Xiao, 2013. "Strategic Information Disclosure: The Case Of Multiattribute Products With Heterogeneous Consumers," Economic Inquiry, Western Economic Association International, vol. 51(1), pages 865-881, January.
    10. Liang Guo, 2020. "Upstream Exploitation and Strategic Disclosure," Marketing Science, INFORMS, vol. 39(5), pages 923-938, September.
    11. Harbaugh, Richmond & To, Theodore, 2020. "False modesty: When disclosing good news looks bad," Journal of Mathematical Economics, Elsevier, vol. 87(C), pages 43-55.
    12. Montero, Maria & Sheth, Jesal D., 2021. "Naivety about hidden information: An experimental investigation," Journal of Economic Behavior & Organization, Elsevier, vol. 192(C), pages 92-116.
    13. Hong, Xianpei & Zhou, Menghuan & Gong, Yeming, 2021. "Dilemma of quality information disclosure in technology licensing," European Journal of Operational Research, Elsevier, vol. 294(2), pages 543-557.
    14. Andrew F. Daughety & Jennifer F. Reinganum, 2008. "Products Liability, Signaling and Disclosure," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 164(1), pages 106-126, March.
    15. Jeanne Hagenbach & Charlotte Saucet, 2024. "Motivated Skepticism," SciencePo Working papers Main hal-03770685, HAL.
    16. Oliver Board, 2009. "Competition And Disclosure," Journal of Industrial Economics, Wiley Blackwell, vol. 57(1), pages 197-213, March.
    17. Ting Liu & Monic Jiayin Sun, 2007. "Informal Payments in Developing Countries' Public Health Sectors¤," Boston University - Department of Economics - Working Papers Series WP2007-032, Boston University - Department of Economics.
    18. Guillaume R. Fréchette & Alessandro Lizzeri & Jacopo Perego, 2022. "Rules and Commitment in Communication: An Experimental Analysis," Econometrica, Econometric Society, vol. 90(5), pages 2283-2318, September.
    19. Sheth, Jesal D., 2021. "Disclosure of information under competition: An experimental study," Games and Economic Behavior, Elsevier, vol. 129(C), pages 158-180.
    20. Erica Myers & Steven L. Puller & Jeremy West, 2022. "Mandatory Energy Efficiency Disclosure in Housing Markets," American Economic Journal: Economic Policy, American Economic Association, vol. 14(4), pages 453-487, November.

    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:22710. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.