An offer you can refuse: The effect of transparency with endogenous conflict of interest

Melis Kartal and James Tremewan

Journal of Public Economics, 2018, vol. 161, issue C, 44-55

Abstract: We study the effects of transparency on information transmission and decision making theoretically and experimentally. We develop a model in which a decision maker seeks advice from a better-informed adviser whose advice might be swayed by financial incentives. Transparency enables the decision maker to learn whether or not the adviser accepted such an incentive, for example from an “interested” third party. Prior theoretical and experimental research mostly found that transparency is ineffective or harmful to decision makers. Our model predicts that transparency is never harmful and, depending on equilibrium selection, may improve the accuracy of decision makers. In our experiment transparency does indeed improve accuracy, especially if it is mandatory.

Keywords: Experimental game theory; Strategic information transmission; Transparency; Conflict of interest; Lobbying (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:161:y:2018:i:c:p:44-55

DOI: 10.1016/j.jpubeco.2018.04.003

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