An initially uninformed agent wishes to sell an asset to a competitive market. The agent selects a test that may generate a result that is informative about the asset’s quality and can be disclosed to the market. The test may not yield a result and the agent can choose to hide some results. Both the test choice and the disclosure policy are strategic. We characterize the unique equilibrium outcome: which tests are chosen and what information is revealed to the market. While the agent generally prefers more informative tests, the amount of information disclosed in equilibrium is inefficient. In particular, informational efficiency can be improved by imposing minimum testing standards.
CITATION STYLE
Scotti, J. R., Jacoby, V. M., Cohen, S., & Patrick, J. H. (2010). Design and Analysis. In Handbook of Clinical Psychology Competencies (pp. 367–396). Springer New York. https://doi.org/10.1007/978-0-387-09757-2_14
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