Breaking Bad News

Moritz Meyer-ter-Vehn and Simon Board

American Economic Review: Insights, 2026, vol. 8, issue 2, 233-46

Abstract: We study how information disclosure shapes social learning about a potentially harmful product. Increased transparency helps early agents avoid harm, which may undermine learning by later agents. Despite this conflict of interest, we show that full transparency is uniquely optimal for all agents when they learn only by observing neighbors' harm. We investigate whether full transparency about harm continues to benefit all agents when they also learn from additional, imperfect signals.

JEL-codes: D18 D82 D83 L15 (search for similar items in EconPapers)
Date: 2026
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DOI: 10.1257/aeri.20250043

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