 Hidden testing and selective disclosure of evidenceClaudia Herresthal Journal of Economic Theory, 2022, vol. 200, issue C Abstract: A decision maker faces a choice to withdraw or to retain a product but is uncertain about its safety. An agent can gather information through sequential testing. Players agree on the optimal choice under certainty, but the decision maker has a higher safety standard than the agent. We compare the case where testing is hidden and the agent can choose whether to disclose his findings to the case where testing is observable. The agent can exploit the additional discretion under hidden testing to his advantage if and only if the decision maker is sufficiently inclined to retain the product. Hidden testing then yields a Pareto improvement over observable testing if the conflict between players is larger than some threshold, but leaves the decision maker worse off and the agent better off if the conflict is smaller than this threshold. Keywords: Endogenous information acquisition; Overt vs covert information acquisition; Verifiable disclosure; Mandatory vs voluntary disclosure; Transparency; Questionable research practices (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:200:y:2022:i:c:s0022053121002192 DOI: 10.1016/j.jet.2021.105402 Access Statistics for this article Journal of Economic Theory is currently edited by A. Lizzeri and K. Shell More articles in Journal of Economic Theory from Elsevier |
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