Is No News (Perceived as) Bad News? An Experimental Investigation of Information Disclosure
54 Pages Posted: 8 Apr 2015 Last revised: 24 Nov 2017
Date Written: November 22, 2017
This paper uses laboratory experiments to directly test a central prediction of disclosure theory: that strategic forces can lead those who possess private information to voluntarily provide it. In a simple two-person disclosure game, we find that senders disclose favorable information, but withhold less favorable information. The degree to which senders withhold information is strongly related to their stated beliefs about receiver actions, and their stated beliefs are accurate on average. Receiver actions are also strongly related to their stated beliefs, but receiver actions and beliefs suggest they are insufficiently skeptical about non-disclosed information. As a result, senders increase expected returns by strategically withholding unfavorable information, in contrast with classic theoretical predictions.
Keywords: Communication games, Disclosure, Unraveling, Experiments
JEL Classification: D82, D83, C92, L15
Suggested Citation: Suggested Citation