Hidden Testing and Selective Disclosure of Evidence

Claudia Herresthal

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: This paper contrasts a decision maker's payoff under public and private information acquisition by a biased advisor. Both players agree on the optimal choice under certainty, but differ in how they trade off the loss from errors. The advisor can sequentially acquire informative test outcomes. If acquisition is private he decides in the final period which realizations to verifiably disclose. If players' preferences are sufficiently misaligned, the decision maker is weakly better off under private rather than public information acquisition. The effect on the advisor's payoff depends on the direction of his bias.

Keywords: endogenous information acquisition; veriable disclosure; strategic experimentation; endogenous information acquisition; verifiable disclosure; transparency (search for similar items in EconPapers)
JEL-codes: D82 D83 (search for similar items in EconPapers)
Date: 2017-03-06
New Economics Papers: this item is included in nep-mic
Note: cush2
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:1712

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