Hidden Testing and Selective Disclosure of Evidence

Claudia Herresthal ()

CRC TR 224 Discussion Paper Series from University of Bonn and University of Mannheim, Germany

Abstract: An agent can sequentially run informative tests about an unknown state and disclose (some or all) outcomes to a decision maker who then faces an approval choice. Players agree on the optimal choice under certainty, but the decision maker has a higher approval threshold than the agent. I compare the case where testing is hidden and the agent chooses which test outcomes to verifiably disclose to the case where testing is observable. When testing is observable, I show that the agent may strategically stop testing even if further tests could yield a mutual benefit. I find conditions under which the decision maker is strictly better off under hidden testing and in some equilibria both players are strictly better off under hidden testing than in the unique equilibrium under observable testing.

Keywords: endogenous information acquisition; verifiable disclosure; transparency; questionable research practices (search for similar items in EconPapers)
JEL-codes: D82 D83 (search for similar items in EconPapers)
Pages: 37
Date: 2020-01
New Economics Papers: this item is included in nep-gth, nep-mic and nep-ore
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:bon:boncrc:crctr224_2020_145v1

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