Third-party certification has evolved as an independent assurance of credence attributes, which a consumer cannot identify pre or post-consumption, of a product when asymmetric information exists between sellers and buyers. Since the adoption of third party certification schemes, specifically in the global agri-food system, there have been several incidents of losses in credibility when a certified product is discovered not to have the attributes it is certified as having. These losses in credibility raise the question of whether the amount of fraud depends on whether the certifier is hired by the seller or by the buyer (e.g. leading up to their 2009 salmonella outbreak, King Nut obtained numerous certifications and food purity guarantees by an auditor that was selected and paid for by Peanut Corporation of America, the peanut supplier for King Nut's peanut butter). The principal-agent model might help explain the opportunistic behavior and lack of objectivity that evolves from a difference in interests between the certifier and seller compared to the buyer(s), which can hinder the food safety or quality goals of the certification scheme. This research will examine the institutional and behavioral forces that appear in the principal-agent model to identify contributing factors to certification fraud, including a survey of current certification bodies.
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