Credibility for Sale: the Effect of Disclosure on Information Acquisition and Transmission

Ming Li and Tymofiy Mylovanov ()

No 9008, Working Papers from Concordia University, Department of Economics

Abstract: We study the effect of disclosure on information acquisition and transmission in a dynamic reputation model. In each period, to make a report to a client, an expert chooses between conducting a costly investigation or channeling a message from an interest group. We show that not disclosing the source of the expert's report may increase the frequency of investigation by the expert. Nevertheless, it decreases the quality of the clients' decisions. We demonstrate that, however, when the importance of decisions vary across time, when the interest groups are long-lived, or when the expert's clientele is growing in her reputation, nondisclosure may improve the quality of the clients' decisions.

Keywords: information acquisition; information transmission; reputation (search for similar items in EconPapers)
JEL-codes: D72 D82 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2009-02, Revised 2009-10
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Working Paper: Credibility for Sale - The Effect of Disclosure on Information Acquisition and Transmission (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:crd:wpaper:09008

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