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Contribution Details

Type Working Paper
Scope Discipline-based scholarship
Title De-biasing strategic communication
Organization Unit
  • Tobias Gesche
  • English
Institution University of Zurich
Series Name Working paper series / Department of Economics
Number 216
ISSN 1664-7041
Number of Pages 38
Date 2017
Abstract Text This paper studies the effect of disclosing conflicts of interest on strategic communication when the sender has lying costs. I present a simple economic mechanism under which such disclosure often leads to more informative, but at the same time also to more biased messages. This benefits rational receivers but exerts a negative externality from them on naive or delegating receivers; disclosure is thus not a Pareto-improvement among receivers. I identify general conditions of the information structure under which this effect manifests and show that whenever it does, full disclosure is socially inefficient. These results hold independently of the degree of receivers' risk-aversion and for an arbitrary precision of the disclosure statement.
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Keywords Strategic communication, misreporting, conflict of interest, disclosure, Kommunikationsstrategie, Interessenkonflikt, Informationspflicht, externer Effekt
Additional Information Revised version