Essays on certification mechanism design in strategic communications
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Certifiers have a crucial role in facilitating effective communication in the online and the traditional world. As a way of generating statistically meaningful information, certification has been adopted in financial statements evaluation and more recently in various online communities as well. This dissertation examines three related issues along this common theme: online reputation market, moderation in user-generated content, and strategic communications in the market for certifications, and consists of three essays. The first essay analyzes the impact of various dispute mechanisms on online identity trading. Online identities with a good reputation profile is a valuable and tradable asset. However, with free identity creation, there is room for low quality sellers to free-ride high quality sellers. When there is a lack of incentive for sellers to maintain a good reputation, identity trading becomes ineffective. This essay focuses on the role of an auditing system, such as eBay dispute center, and shows that even a small amount of objective information from the auditors can reverse the negative result and sustain reliable reputation and identity trading. The second essay investigates the impact of moderation on the quality of information in an user-generated content (UGC) environment. In most UGC communities, content contributors have incentive to publish biased or false information. For example, companies hire people to write positive reviews about themselves. This essay establishes a framework for the mechanism design of moderation, and provides insight on how to optimally allocate moderation resource. The third essay examines a market for certification and certifiers' strategic reporting behaviors. The central question is how to induce certifiers to provide statistically meaningful information to investors when they are paid by their client firms. We provide insights on how certifier competition plays an role in firms' certifier choice, how certifiers degrade their accuracies to achieve maximum profit, and how the legal environment impacts the information quality.