Disclosures About Disclosures: Can Conflict of Interest Warnings be Made More Effective?

Ahmed E. Taha and John V. Petrocelli

Journal of Empirical Legal Studies, 2015, vol. 12, issue 2, 236-251

Abstract: People regularly rely on advisors who have conflicts of interest. The law often requires advisors to disclose these conflicts. Despite these disclosures, people generally insufficiently discount conflicted advice. This might be partly due to people interpreting the very fact that the advisor is disclosing a conflict of interest as a sign that the advisor is trustworthy, undermining the purpose and effectiveness of the disclosure. This article presents the results of an experiment indicating that requiring advisors to also disclose that they are legally required to disclose their conflict of interest makes people discount their advice more. This occurs, at least in part, because such advisors are viewed as less trustworthy than advisors who merely disclose their conflict of interest without also stating that the disclosure is legally required.

Date: 2015
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https://doi.org/10.1111/jels.12071

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Persistent link: https://EconPapers.repec.org/RePEc:wly:empleg:v:12:y:2015:i:2:p:236-251

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