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122 Yale L. J. 574 (2012-2013)
Fudging the Nudge: Information Disclosure and Restaurant Grading

handle is hein.journals/ylr122 and id is 605 raw text is: DANIEL E. HO Fudging the Nudge: Information Disclosure and Restaurant Grading A B S T R A C T. One of the most promising regulatory currents consists of targeted disclosure: mandating simplified information disclosure at the time of decisionmaking to nudge parties along. Its poster child is restaurant sanitation grading. In principle, a simple posted letter grade ('A,' 'B,' or 'C') empowers consumers and properly incentivizes restaurateurs to reduce risks for foodborne illness. Yet empirical evidence of the efficacy of restaurant grading is sparse. This Article fills the void by studying over 700,00o health inspections of restaurants across ten jurisdictions, focusing on San Diego and New York. Despite grading's great promise, we show that the regulatory design, implementation, and practice suffer from serious flaws: jurisdictions fudge more than nudge. In San Diego, grade inflation reigns. Nearly all restaurants receive 'A's. In New York, inspections exhibit little substantive consistency. A good score does not meaningfully predict cleanliness down the road. Unsurprisingly, New York's implementation of letter grading in 2010 has not discernably reduced manifestations of foodborne illness. Perhaps worse, the system perversely shifts inspection resources away from higher health hazards to resolve grade disputes. These results have considerable implications, not only for food safety, but also for the institutional design of information disclosure. A U T H O R. Professor of Law, Stanford Law School; E-mail: dho@law.stanford.edu, URL: http://dho.stanford.edu. Thanks to Patrick Leahy, Mridula Raman, Jess Seok, and Ellen Stuart for excellent research assistance, and Bruce Ackerman, Jennifer H. Arlen, Ian Ayres, Vicki L. Been, Omri Ben-Shahar, Robert Bookman, Ryan Bubb, Martiano-Florentino Cudllar, Michael C. Dorf, Ted Eisenberg, Robert C. Ellickson, David Freeman Engstrom, Michael Frakes, Stephen Galoob, Jonah B. Gelbach, Heather Gerken, Jacob Gersen, Abbe R. Gluck, Valerie Hans, Oona A. Hathaway, Michael Heise, Robert A. Hillman, Christine Jolls, Amy Kapczynski, Louis Kaplow, Mark Kelman, Jon Klick, Mitchell Lasser, Daryl Levinson, Daniel Markovits, Florencia Marotta-Wurgler, Bernie Meyler, Alison D. Morantz, Nicholas Parrillo, Robert C. Post, Jeff Rachlinski, Richard L. Revesz, Roberta Romano, Susan Rose-Ackerman, Jed Rubenfeld, Steven Shavell, Bill Simon, Laura Trice, Tom Tyler, David N. Weil, John Fabian Witt, and participants at the Administrative Law Roundtable at Columbia Law School, the law and economics workshops at ETH Zurich and Harvard Law School, and the faculty workshops at Cornell, Stanford, and Yale Law Schools for helpful comments and conversations, Q Ethan McCallum for sharing data, Tolga Ergunay and Darin Phelps for computational assistance, and Mike VanderHeijden and Sarah Kraus for help with FDA sources. The empirical work was collaborative, so this Article refers to the research team in the plural. 574

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