The optimal choice of pre-launch reviewer: how best to transmit information using tests and conditional pricing
Gill, David, 1975- and Sgroi, Daniel (2008) The optimal choice of pre-launch reviewer: how best to transmit information using tests and conditional pricing. Working Paper. Coventry: University of Warwick, Department of Economics. (Warwick economic research papers).
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A principal who knows her type can face public testing to help attract endorsements from agents. Tests are pass/fail and have an innate toughness (bias) corresponding to a trade-off between the higher probability of passing a softer test and the greater impact on agents’ beliefs from passing a tougher test. Conditional on the test result, the principal also selects the price of endorsement. The principal always wants to be tested, and chooses the toughest or softest test available depending upon the precision of the agents’ and tests’ information. Applications abound in industrial organization, political economy and labor economics.
|Item Type:||Working or Discussion Paper (Working Paper)|
|Subjects:||H Social Sciences > HF Commerce|
|Divisions:||Faculty of Social Sciences > Economics|
|Library of Congress Subject Headings (LCSH):||Commercial products -- Testing, Bayesian statistical decision theory, Information asymmetry, Communication -- Economic aspects, Advertising -- New products|
|Series Name:||Warwick economic research papers|
|Publisher:||University of Warwick, Department of Economics|
|Place of Publication:||Coventry|
|Date:||19 November 2008|
|Number of Pages:||34|
|Status:||Not Peer Reviewed|
|Access rights to Published version:||Open Access|
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