62 Pages Posted: 21 May 2018 Last revised: 20 Apr 2021
Date Written: February 18, 2021
We present evidence that unnecessarily complex disclosure can result from strategic incentives to shroud information. In our lab experiment, senders are required to report their private information truthfully, but can choose how complex to make their reports. We find that senders use complex disclosure over half the time. This obfuscation is profitable because receivers make systematic mistakes in assessing complex reports. Regression and structural analysis suggest that these mistakes could be driven by receivers who are naïve about the strategic use of complexity or overconfident about their ability to process complex information.
Suggested Citation: Suggested Citation