Incentives to Acquire Information under Mandatory versus Voluntary Disclosure

Urs Schweizer

The Journal of Law, Economics, and Organization, 2017, vol. 33, issue 1, 173-192

Abstract: This article examines the incentives of a party to acquire information prior to negotiating contractual terms with a second party under two different legal regimes: mandatory versus voluntary disclosure. By assumption, information can only truthfully be disclosed but, under voluntary disclosure, having found no evidence cannot credibly be communicated. If the information-acquiring party has all the bargaining power, then, under voluntary disclosure, she will invest more in information acquisition than is welfare maximizing in many situations. At lesser bargaining power, however, this need not be the case. If information directly benefits the non-acquiring party only, then incentives to acquire under voluntary disclosure are less than under mandatory disclosure, and the latter leads to less than welfare-maximizing acquisition. Most results are independent of the underlying bargaining structure as mainly use of constraints is made that hold for equilibrium payoffs from any bargaining game. (JEL K12, D86)

JEL-codes: D86 K12 (search for similar items in EconPapers)
Date: 2017
References: Add references at CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
http://hdl.handle.net/10.1093/jleo/eww007 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:jleorg:v:33:y:2017:i:1:p:173-192.

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

The Journal of Law, Economics, and Organization is currently edited by Andrea Prat

More articles in The Journal of Law, Economics, and Organization from Oxford University Press Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK.
Bibliographic data for series maintained by Oxford University Press ().