Is No News (Perceived as) Bad News? An Experimental Investigation of Information Disclosure

54 Pages Posted: 8 Apr 2015 Last revised: 24 Nov 2017

See all articles by Ginger Zhe Jin

Ginger Zhe Jin

University of Maryland - Department of Economics; National Bureau of Economic Research (NBER)

Michael Luca

Harvard Business School

Daniel Martin

Northwestern University - Department of Managerial Economics and Decision Sciences (MEDS)

Multiple version iconThere are 2 versions of this paper

Date Written: November 22, 2017

Abstract

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

Jin, Ginger Zhe and Luca, Michael and Martin, Daniel, Is No News (Perceived as) Bad News? An Experimental Investigation of Information Disclosure (November 22, 2017). Harvard Business School NOM Unit Working Paper No. 15-078. Available at SSRN: https://ssrn.com/abstract=2591450 or http://dx.doi.org/10.2139/ssrn.2591450

Ginger Zhe Jin

University of Maryland - Department of Economics ( email )

College Park, MD 20742
United States
301-405-3484 (Phone)
301-405-3542 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Michael Luca (Contact Author)

Harvard Business School ( email )

Soldiers Field Road
Boston, MA 02163
United States

HOME PAGE: http://drfd.hbs.edu/fit/public/facultyInfo.do?facInfo=ovr&facId=602417

Daniel Martin

Northwestern University - Department of Managerial Economics and Decision Sciences (MEDS) ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

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