Complex Disclosure

62 Pages Posted: 21 May 2018 Last revised: 20 Apr 2021

See all articles by Ginger Zhe Jin

Ginger Zhe Jin

University of Maryland - Department of Economics; National Bureau of Economic Research (NBER)

Michael Luca

Harvard University - Business School (HBS)

Daniel Martin

Northwestern University - Department of Managerial Economics and Decision Sciences (MEDS)

Multiple version iconThere are 2 versions of this paper

Date Written: February 18, 2021

Abstract

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

Jin, Ginger Zhe and Luca, Michael and Martin, Daniel, Complex Disclosure (February 18, 2021). Harvard Business School NOM Unit Working Paper No. 18-105, Available at SSRN: https://ssrn.com/abstract=3182586 or http://dx.doi.org/10.2139/ssrn.3182586

Ginger Zhe Jin

University of Maryland - Department of Economics ( email )

College Park, MD 20742
United States
301-405-3484 (Phone)
301-405-3542 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
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Michael Luca (Contact Author)

Harvard University - Business School (HBS) ( email )

Soldiers Field Road
Boston, MA 02163
United States

HOME PAGE: http://drfd.hbs.edu/fit/public/facultyInfo.do?facInfo=ovr&facId=602417

Daniel Martin

Northwestern University - Department of Managerial Economics and Decision Sciences (MEDS) ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

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