The information asymmetries inherent in credence goods have typically led economists to conclude these markets require well-defined quality standards and third-party verification that producers are meeting those standards. Nonetheless, many producers of credence goods appear to be opting out of...

We study a two-stage agency model in which the players take the role of the principal in turn. In the first stage, the board of the firm decides payment to the manager to induce him to set up and implement a project. In the second stage, the board evaluates the project to learn its value, and...