Abstract

http://ssrn.com/abstract=480121
 
 

References (32)



 
 

Citations (33)



 


 



The Dirt on Coming Clean: Perverse Effects of Disclosing Conflicts of Interest


Daylian M. Cain


Yale School of Management

George Loewenstein


Carnegie Mellon University - Department of Social and Decision Sciences

Don A. Moore


University of California, Berkeley - Haas School of Business

December 1, 2003


Abstract:     
Conflicts of interest can lead experts to give biased and corrupt advice. Although disclosure is often proposed as a potential solution to these problems, we show that it can have perverse effects. First, people generally do not discount advice from biased advisors as much as they should, even when advisors' conflicts of interest are honestly disclosed. Second, disclosure can increase the bias in advice because it leads advisors to feel morally licensed and strategically encouraged to exaggerate their advice even further. This means that while disclosure may [insufficiently] warn an audience to discount an expert-opinion, disclosure might also lead the expert to alter the opinion offered and alter it in such a way as to overcompensate for any discounting that might occur. As a result, disclosure may fail to solve the problems created by conflicts of interest and it may sometimes even make matters worse.

This paper is part of a larger body of research which examines how trying to regulate ethical behavior (and/or trying to protect consumers) can potentially backfire.

Number of Pages in PDF File: 33

Keywords: conflicts of interest, disclosure, advice, advising, moral licensing, altruism, consumer protection, regulation, ethics

JEL Classification: D18,D32,D40,D64,D70,D80,G18,G34,M30,M41,M45

working papers series





Download This Paper

Date posted: January 12, 2009  

Suggested Citation

Cain, Daylian M. and Loewenstein, George and Moore, Don A., The Dirt on Coming Clean: Perverse Effects of Disclosing Conflicts of Interest (December 1, 2003). Available at SSRN: http://ssrn.com/abstract=480121 or http://dx.doi.org/10.2139/ssrn.480121

Contact Information

Daylian M. Cain (Contact Author)
Yale School of Management ( email )
New Haven, CT 06520
United States
203 432 9441 (Phone)
HOME PAGE: http://mba.yale.edu/faculty/profiles/cain.shtml
George F. Loewenstein
Carnegie Mellon University - Department of Social and Decision Sciences ( email )
Pittsburgh, PA 15213-3890
United States
412-268-8787 (Phone)
412-268-6938 (Fax)
Don A. Moore
University of California, Berkeley - Haas School of Business ( email )
545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States
Feedback to SSRN


Paper statistics
Abstract Views: 5,968
Downloads: 729
Download Rank: 18,768
References:  32
Citations:  33

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo1 in 0.437 seconds