Fees, Reputation, and Information Production in the Credit Rating Industry

• 成果类型: Article
• 署名作者: Bizzotto, Jacopo; Vigier, Adrien
• 署名单位: Oslo Metropolitan University (OsloMet); BI Norwegian Business School
• 刊物名称: AMERICAN ECONOMIC JOURNAL-MICROECONOMICS
• ISSN/ISSBN: 1945-7669
• DOI: 10.1257/mic.20180170
• 发表日期: 2021
• 页码: 1-34
• 关键词: Certification; entry

摘要

We compare a credit rating agency's incentives to acquire costly information when it is only paid for giving favorable ratings to the corresponding incentives when the agency is paid up-front, i.e., irrespective of the ratings assigned. We show that, in the presence of moral hazard, contingent fees provide stronger dynamic incentives to acquire information than up-front fees and may induce higher social welfare. When the fee structure is chosen by the agency, contingent fees arise as an equilibrium outcome, in line with the way the market for credit rating actually works.