When Sunlight Fails to Disinfect: Understanding the Perverse Effects of Disclosing Conflicts of Interest

Daylian M. Cain, George Loewenstein and Don A. Moore

Journal of Consumer Research, 2011, vol. 37, issue 5, 836 - 857

Abstract: Disclosure is often proposed as a remedy for conflicts of interest, but it can backfire, hurting those whom it is intended to protect. Building on our prior research, we introduce a conceptual model of disclosure's effects on advisors and advice recipients that helps to explain when and why it backfires. Studies 1 and 2 examine psychological mechanisms (strategic exaggeration, moral licensing) by which disclosure can lead advisors to give more-biased advice. Study 3 shows that disclosure backfires when advice recipients who receive disclosure fail to sufficiently discount and thus fail to mitigate the adverse effects of disclosure on advisor bias. Study 4 identifies one remedy for inadequate discounting of biased advice: explicitly and simultaneously contrasting biased advice with unbiased advice.

Date: 2011
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