When mandatory disclosure hurts:: Expert advice and conflicting interests

• 成果类型: Article
• 署名作者: Li, Ming; Madarasz, Kristof
• 署名单位: University of California System; University of California Berkeley; Concordia University - Canada
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/j.jet.2007.07.009
• 发表日期: 2008
• 页码: 47-74
• 关键词: cheap-talk; Conflicts of interest; disclosure

摘要

We study the quality of advice that an informed and biased expert gives to an uninformed decision maker. We compare two scenarios: mandatory disclosure of the bias and nondisclosure, where information about the bias can only be revealed through cheap-talk. We find that in many scenarios nondisclosure allows for higher welfare for both parties. Hiding the bias allows for more precise communication for the more biased type and, if different types are biased in different directions, may allow for the same for the less biased type. We identify contexts where equilibrium revelation allows but mandatory disclosure prevents meaningful communication. (C) 2007 Elsevier Inc. All rights reserved.