Compulsory Disclosure of Private Information: Theoretical and Experimental Results for the Acquiring-a-Company Game

Werner Güth, Kerstin Pull, Manfred Stadler and Alexandra Zaby

Journal of Institutional and Theoretical Economics (JITE), 2019, vol. 175, issue 3, 502-523

Abstract: Compulsory disclosure of private information to an uninformed seller or buyer ofa company is intended to induce welfare-enhancing transactions. Our theoretical and experimental investigation suggests different effects of information disclosure on seller and buyer decisions. When sellers are uninformed, information disclosure increases the probability of transactions, whereas when buyers are uninformed, disclosure increases the probability of transactions only if sellers' valuation of the company is sufficiently high. We extend the acquiring-a-company game to derive predictions regarding the effects of disclosure and experimentally investigate the transition from asymmetric to symmetric information.

Keywords: compulsory disclosure of private information; acquiring a company; asymmetric information; experimental economics (search for similar items in EconPapers)
JEL-codes: C91 D61 D82 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (4)

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Related works:
Working Paper: Compulsory Disclosure of Private Information Theoretical and Experimental Results for the "Acquiring-a-Company" Game (2014)
Working Paper: Compulsory disclosure of private information theoretical and experimental results for the "acquiring-a-company" game (2014)
Working Paper: Compulsory Disclosure of Private Information - Theoretical and Experimental Results for the Acquiring-a-Company Game (2014)
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DOI: 10.1628/jite-2018-0013

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