When to Drop a Bombshell
Gabriele Gratton (),
Richard Holden () and
Review of Economic Studies, 2018, vol. 85, issue 4, 2139-2172
Sender, who is either good or bad, wishes to look good at an exogenous deadline. Sender privately observes if and when she can release a public flow of information about her private type. Releasing information earlier exposes to greater scrutiny, but signals credibility. In equilibrium bad Sender releases information later than good Sender. We find empirical support for the dynamic predictions of our model using data on the timing of U.S. presidential scandals and U.S. initial public offerings. In the context of elections, our results suggest that October Surprises are driven by the strategic behaviour of bad Sender.
Keywords: Information disclosure; Strategic timing; Bayesian learning; Credibility versus scrutiny (search for similar items in EconPapers)
JEL-codes: D72 D82 D83 L82 (search for similar items in EconPapers)
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Working Paper: When to Drop a Bombshell (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:oup:restud:v:85:y:2018:i:4:p:2139-2172.
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