Is No News (Perceived as) Bad News? An Experimental Investigation of Information Disclosure

Ginger Zhe Jin (), Michael Luca () and Daniel Martin ()
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Ginger Zhe Jin: University of Maryland
Michael Luca: Harvard Busieness School, Negotiation, Organizations & Markets Unit
Daniel Martin: Northwestern Kellogg School of Management

No 15-078, Harvard Business School Working Papers from Harvard Business School

Abstract: This paper uses laboratory experiments to directly test a central prediction of disclosure theory: that strategic forces can lead those who possess private information to voluntarily provide it. In a simple two-person disclosure game, we find that senders disclose favorable information, but withhold less favorable information. The degree to which senders withhold information is strongly related to their stated beliefs about receiver actions, and their stated beliefs are accurate on average. Receiver actions are also strongly related to their stated beliefs, but receiver actions and beliefs suggest they are insufficiently skeptical about non-disclosed information. As a result, senders increase expected returns by strategically withholding unfavorable information, in contrast with classic theoretical predictions.

Keywords: Communication games; Disclosure; Unraveling; Experiments (search for similar items in EconPapers)
JEL-codes: C92 D82 D83 L15 (search for similar items in EconPapers)
Pages: 54 pages
Date: 2015-04, Revised 2017-11
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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http://www.hbs.edu/faculty/pages/download.aspx?name=15-078.pdf Revised version, 2017 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:hbs:wpaper:15-078

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