 Disclosure of information under competition: An experimental studyJesal D. Sheth Games and Economic Behavior, 2021, vol. 129, issue C, 158-180 Abstract: The theory of voluntary disclosure of information posits that market forces lead firms (senders) to disclose information through a process of unravelling. This prediction requires that consumers (receivers) hold correct beliefs and, in equilibrium, make adverse inferences about non-disclosed information. Previous research finds that receivers are naïve and do not sufficiently infer non-disclosure as bad news, leading to the failure of complete unravelling. This paper experimentally examines whether competition between senders increases unravelling and decreases receivers' naivety about non-disclosed information. We find that while complete unravelling fails to occur, competition between senders significantly increases unravelling and receivers' overall welfare. Receivers' welfare increases despite no significant difference in their guesses or beliefs about non-disclosed information relative to the treatment without competition, and this is driven by higher rates of disclosure by senders. We conclude that competition between senders positively affects disclosure of information and receivers' welfare. Keywords: Competition; Experiment; Disclosure; Verifiable information; Conflict of interest (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:gamebe:v:129:y:2021:i:c:p:158-180 DOI: 10.1016/j.geb.2021.05.009 Access Statistics for this article Games and Economic Behavior is currently edited by E. Kalai More articles in Games and Economic Behavior from Elsevier |
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