Verifiable Disclosure

41 Pages Posted: 24 Aug 2015 Last revised: 19 Jul 2016

See all articles by Jeremy Bertomeu

Jeremy Bertomeu

University of California, San Diego (UCSD) - Rady School of Management

Davide Cianciaruso

HEC Paris - Accounting and Management Control Department

Date Written: August 15, 2015

Abstract

We develop a unified treatment of a broad class of truthful disclosure games. Such games have, at most, one equilibrium that is reasonable given a commonly used signaling refinement. We provide a simple algorithm to construct the unique equilibrium strategy and beliefs, and identify necessary and sufficient conditions for existence. This approach applies to multidimensional verifiable disclosure games with arbitrary costs or information endowments. We prove the following conjecture: a disclosure regulation that commits the sender to providing more precise information reduces welfare in a competitive market. We also perform comparative statics with respect to frictions that prevent unraveling and show, in an application, that the reasonable equilibrium involves sanitation.

Keywords: Disclosure, unraveling, verification, truthful, uncertain information endowment, sanitation

JEL Classification: D82, L15, M37, M41

Suggested Citation

Bertomeu, Jeremy and Cianciaruso, Davide, Verifiable Disclosure (August 15, 2015). Available at SSRN: https://ssrn.com/abstract=2649651 or http://dx.doi.org/10.2139/ssrn.2649651

Jeremy Bertomeu (Contact Author)

University of California, San Diego (UCSD) - Rady School of Management ( email )

9500 Gilman Drive
Rady School of Management
La Jolla, CA 92093
United States

Davide Cianciaruso

HEC Paris - Accounting and Management Control Department ( email )

Jouy-en-Josas
France

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