When Sunlight Fails to Disinfect: Understanding the Perverse Effects of Disclosing Conflicts of Interest

Posted: 7 Jul 2010

See all articles by Daylian M. Cain

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

Date Written: July 7, 2010

Abstract

Disclosure is often proposed as a remedy for conflicts of interest, but it can backfire, hurting those whom it is intended to protect. Building on our prior research, we introduce a conceptual model of disclosure’s effects on advisors and advice recipients that helps to explain when and why it backfires. Studies 1 and 2 examine psychological mechanisms (strategic exaggeration, moral licensing) by which disclosure can lead advisors to give more-biased advice. Study 3 shows that disclosure backfires when advice recipients who receive disclosure fail to sufficiently discount and thus fail to mitigate the adverse effects of disclosure on advisor bias. Study 4 identifies one remedy for inadequate discounting of biased advice: explicitly and simultaneously contrasting biased advice to unbiased advice.

Suggested Citation

Cain, Daylian M. and Loewenstein, George F. and Moore, Don A., When Sunlight Fails to Disinfect: Understanding the Perverse Effects of Disclosing Conflicts of Interest (July 7, 2010). Journal of Consumer Research, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1635819

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

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