Verifiable disclosure

Jeremy Bertomeu () and Davide Cianciaruso
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Jeremy Bertomeu: City University of New York
Davide Cianciaruso: Northwestern University

Economic Theory, 2018, vol. 65, issue 4, No 8, 1044 pages

Abstract: Abstract We develop a unified treatment of truthful disclosure (persuasion) games, providing a joint framework that nests, among other models, unraveling theory, costly disclosure, uncertainty about information endowment and multi-dimensional disclosure. We show the existence of (at most) a unique equilibrium that is reasonable given a commonly used signaling refinement, and provide a constructive proof of the equilibrium strategy and beliefs. We use the model to examine the following question: can the sender benefit from a regulation that commits to disclosing more precise information? We show that the sender is worse off if an unconditional reduction in discretion induces a more informative equilibrium. Conversely, mandating disclosure of unfavorable information may increase the sender’s ex ante payoff.

Keywords: Disclosure; Unraveling; Verification; Truthful; Uncertain information endowment; Sanitation (search for similar items in EconPapers)
JEL-codes: D82 L15 M37 M41 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (9)

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DOI: 10.1007/s00199-017-1048-x

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