The Burden of Disclosure: Increased Compliance with Distrusted Advice

Sah, S., Loewenstein, G., & Cain, D. (2013). The Burden of Disclosure: Increased Compliance with Distrusted Advice. Journal of Personality and Social Psychology, Vol 104(2), 289-304. doi: 10.1037/a0030527.

Posted: 25 May 2010 Last revised: 3 Nov 2013

Sunita Sah

Johnson Graduate School of Management, Cornell University

George Loewenstein

Carnegie Mellon University - Department of Social and Decision Sciences

Daylian M. Cain

Yale School of Management

Date Written: December 7, 2011

Abstract

Professionals are often influenced by conflicts of interest when they have a personal, often material, interest in giving biased advice. Although disclosure (informing advisees about the conflict of interest) is often proposed as a solution to problems caused by such conflicts, prior research has found both positive and negative effects of disclosure. We present four experiments that reveal a previously unrecognized perverse effect of disclosure: While disclosure can decrease advisees’ trust in the advice, it simultaneously increases pressure to comply with that same advice. We demonstrate that the increased pressure results from advice recipients feeling obliged to help satisfy their advisors’ personal interests when those interests have been disclosed. Hence, disclosure can burden those it is ostensibly intended to protect. We show that the increased pressure to comply is reduced if (1) the disclosure is provided by an external source rather than from the advisor, (2) the disclosure is not common knowledge between the advisor and advisee, (3) a cooling-off period is introduced, or, (4) the advisee can make the decision in private.

Keywords: conflicts of interest, disclosure, advice, ethics, regulation, reluctant altruism

Suggested Citation

Sah, Sunita and Loewenstein, George and Cain, Daylian M., The Burden of Disclosure: Increased Compliance with Distrusted Advice (December 7, 2011). Sah, S., Loewenstein, G., & Cain, D. (2013). The Burden of Disclosure: Increased Compliance with Distrusted Advice. Journal of Personality and Social Psychology, Vol 104(2), 289-304. doi: 10.1037/a0030527. . Available at SSRN: https://ssrn.com/abstract=1615025 or http://dx.doi.org/10.2139/ssrn.1615025

Sunita Sah (Contact Author)

Johnson Graduate School of Management, Cornell University ( email )

Ithaca, NY 14853
United States

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)

Daylian M. Cain

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

Paper statistics

Abstract Views
2,063