Disease forecasts and livestock health disclosure: A Shepherd's dilemma

Glenn Sheriff, Daniel Osgood

Research output: Contribution to journalArticle

8 Scopus citations

Abstract

We analyze how to induce sellers to disclose food safety. With repeated interactions and safety correlated over time, cash transfers alone do not ensure disclosure. Perfect, but costly, testing ensures disclosure with a complex lottery that may be difficult to implement in practice. In contrast, even a noisy quality forecast allows the buyer to induce perfect disclosure with a simple pricing scheme. Forecast introduction may benefit or harm sellers. After introduction, sellers may suffer from increases in forecast precision. As an illustration, we cast our model in the context of Rift Valley fever in an East African livestock market.

Original languageEnglish (US)
Pages (from-to)776-788
Number of pages13
JournalAmerican Journal of Agricultural Economics
Volume92
Issue number3
DOIs
StatePublished - Apr 1 2010
Externally publishedYes

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Keywords

  • Adverse selection
  • Climate forecast
  • Credence goods
  • Noisy signals
  • Product safety

ASJC Scopus subject areas

  • Agricultural and Biological Sciences (miscellaneous)
  • Economics and Econometrics

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