Costly Evidence and Discretionary Disclosure

Mark Whitmeyer and Kun Zhang

Papers from arXiv.org

Abstract: A sender flexibly acquires evidence--which she may pay a third party to certify--to disclose to a receiver. When evidence acquisition is overt, the receiver observes the evidence gathering process irrespective of whether its outcome is certified. When acquisition is covert, the receiver does not. In contrast to the case with exogenous evidence, the receiver prefers a strictly positive certification cost. As acquisition costs vanish, equilibria converge to the Pareto-worst free-learning equilibrium. The receiver always prefers covert to overt evidence acquisition.

Date: 2022-08
New Economics Papers: this item is included in nep-gth and nep-mic
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Citations: View citations in EconPapers (2)

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