When to Drop a Bombshell

Abstract

At an exogenous deadline, Receiver takes an action, the payoff from which depends on Sender’s private type. Sender privately observes if and when a bombshell arrives. Upon arrival, she chooses when to drop it, which starts a public flow of information about her type. Dropping the bombshell earlier exposes it to greater scrutiny, but signals credibility. We characterize the set of equilibria and show that Sender delays dropping the bombshell, and completely withholds it with positive probability. Our model provides an explanation for an “October Surprise” effect and generates further predictions about the dynamics of information disclosure during election campaigns. We find empirical support for these predictions in data on US presidential scandals.

Keywords: Information Disclosure, Strategic Timing, Bayesian Learning, Credibility vs. Scrutiny

JEL Classification: D72, D82, D83