Advisors with hidden motives

Paula Onuchic

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: An advisor discloses evidence about an object to a potential buyer, who doesn't know the object's value or the profitability of its sale (the advisor's motives). I characterize optimal disclosure rules that balance two goals: maximizing the overall probability of sale, and steering sales from lower- to higher-profitability objects. I consider the implications of a regulation that forces the advisor to always reveal her motives to the buyer. I show that whether such policies induce the advisor to disclose more evidence about the object's value hinges on the curvature of the buyer's demand for the object. This result refines our understanding of effective regulation of advisor-advisee communication with and without commitment.

JEL-codes: J1 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2025-10-31
New Economics Papers: this item is included in nep-des and nep-mic
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Published in Games and Economic Behavior, 31, October, 2025, 153, pp. 431 - 450. ISSN: 0899-8256

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