Random Disclosure Costs: A Unified Theory of Disclosure

Jeremy Bertomeu, Edwige Cheynel and Keri Hu

Papers from arXiv.org

Abstract: We propose a unified framework for a class of evidence games in which a sender, seeking to increase posterior expectations (e.g., a market price), chooses whether to reveal or withhold her information. Our model nests several classic models, including type-dependent disclosure costs or benefits, uncertain information endowment, and the market for lemons. Frictions are captured as random disclosure costs that are privately known to the sender and noisily inferred by the receiver. We derive a simple characterization of the equilibrium and show that it features increasing disclosure for lower frictions or greater fundamental uncertainty. Further, with high uncertainty or low frictions, greater uncertainty about disclosure costs decreases the likelihood of disclosure. Positive costs do not necessarily rule out unraveling to full disclosure, especially when outcomes have heavy tails or when disclosure costs are not constant. Finally, we demonstrate that the model can be estimated with a simple probit, suggesting that cost uncertainty is descriptive of real-world behavior.

Date: 2026-10
References: Add references at CitEc
Citations:

Published in Journal of Business Finance & Accounting (2026)

Downloads: (external link)
https://arxiv.org/pdf/2610.27627 Latest version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2610.27627

Access Statistics for this paper

More papers in Papers from arXiv.org
Bibliographic data for series maintained by arXiv administrators ().