Optional Disclosure and Observational Learning

Abstract

Observational learning theories often assume that people’s actions can be observed. However, in many naturally-occurring environments, individuals can choose whether to disclose their behavior to others. We provide theoretical analysis of observational learning under optional disclosure conditions. We further examine empirically how individuals decide whether to reveal decisions. Although we find evidence for other- regarding disclosure behavior, our findings highlight the importance of providing public information about how the disclosure behavior affects others.

Keywords: Observational Learning, Information Cascade, Optional Disclosure, Other-Regarding Preferences

JEL Classification: C91, D82, D83, D64, D91