Optional Disclosure and Observational Learning

50 Pages Posted: 7 Dec 2017

See all articles by Diefeng Peng

Diefeng Peng

Central South University

Yulei Rao

Central South University

Xianming Sun

Zhongnan University of Economics and Law - School of Finance

Erte Xiao

Monash University

Date Written: November 24, 2017

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

Suggested Citation

Peng, Diefeng and Rao, Yulei and Sun, Xianming and Xiao, Erte, Optional Disclosure and Observational Learning (November 24, 2017). Available at SSRN: https://ssrn.com/abstract=3083741 or http://dx.doi.org/10.2139/ssrn.3083741

Diefeng Peng

Central South University ( email )

Changsha, Hunan 410083
China

Yulei Rao

Central South University ( email )

Changsha, Hunan 410083
China

Xianming Sun

Zhongnan University of Economics and Law - School of Finance ( email )

WenQuan Building, 182# Nanhu Avenue
East Lake High-tech Development Zone
Wuhan, Hubei 430073
China

Erte Xiao (Contact Author)

Monash University ( email )

23 Innovation Walk
Wellington Road
Clayton, Victoria 3800
Australia

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