Joint Industrial Organization & Public Economics Workshop - Ginger Jin
Thu, 04/13/2017 - 2:30pm
University of Maryland & Director, Bureau of Economics, Federal Trade Commission
109 Ives Hall
"Too Much or Too Little? Insights from Disclosure Experiments (joint w/Michael Luca & Daniel Martin)"
Based on a series of lab experiments conducted in NYU and Harvard, we aim to better understand how subjects behave in regimes that feature voluntary or mandatory disclosure. Part of the research has already been incorporated in the NBER working paper titled "Is No News (Perceived as) Bad News? An Experimental Investigation of Information Disclosure." More specifically, we find that receivers are insufficiently skeptical about non-disclosed information, and as a consequence, senders do not always disclose their private information. However, when subjects are informed about non-disclosed information after each round, behavior slowly converges to full unraveling. This convergence appears to be driven by an asymmetric response in receiver actions after learning that they were profitably deceived. Despite the change in receiver behavior, stated beliefs about sender strategies remain insufficiently skeptical, which suggests that while direct and immediate feedback induces equilibrium behavior, it does not reduce strategic naïveté. Follow-up experiments show that mandatory disclosure does not solve the problem, when senders are given a choice on the complexity of disclosure. All the above is joint with Michael Luca at Harvard Business School and Daniel Martin at Northwestern Kellogg School of Management.
Event Categories: Industrial Organization