On the optimality of full disclosure

Emiliano Catonini and Sergey Stepanov

Papers from arXiv.org

Abstract: A privately-informed sender can commit to any disclosure policy towards a receiver. We show that full disclosure is optimal under a sufficient condition with some desirable properties. First, it speaks directly to the utility functions of the parties, as opposed to the indirect utility function of the sender; this makes it easily interpretable and verifiable. Second, it does not require the sender's payoff to be a function of the posterior mean. Third, it is weaker than the known conditions for some special cases. With this, we show that full disclosure is optimal under modeling assumptions commonly used in principal-agent papers.

Date: 2022-02, Revised 2023-02
New Economics Papers: this item is included in nep-ban, nep-hrm, nep-mic and nep-upt
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