Spin Doctors: A Model and an Experimental Investigation of Vague Disclosure

50 Pages Posted: 31 Oct 2018

See all articles by Marvin Deversi

Marvin Deversi

Ludwig Maximilian University of Munich (LMU) - Faculty of Economics

Alessandro Ispano

CY Cergy Paris Université

Peter Schwardmann

Ludwig Maximilian University of Munich (LMU) - Faculty of Economics; Ludwig Maximilian University of Munich (LMU)

Date Written: 2018

Abstract

Unfavorable news are often delivered under the disguise of vagueness. But are people sufficiently naive to be fooled by such positive spin? We use a theoretical model and a laboratory experiment to study the strategic use of vagueness in a voluntary disclosure game. Consider a sender who aims at inflating a receiver’s estimate of her type and who may disclose any interval that contains her actual type. Theory predicts that when facing a possibly naive receiver, the sender discloses an interval that separates her from worse types but is upwardly vague. Senders in the experiment adopt this strategy and some (naive) receivers are systematically misled by it. Imposing precise disclosure leads to less, but more easily interpretable, disclosure. Both theory and experimental data further suggest that imposing precision improves overall information transmission and is especially beneficial to naive receivers. Our results have implications for the rules that govern the disclosure of quality-relevant information by firms, the disclosure of research findings by scientists, and testimonies in a court of law.

Keywords: communication, naivete, flexibility, regulation

JEL Classification: D820, D830, C920, L150, D040

Suggested Citation

Deversi, Marvin and Ispano, Alessandro and Schwardmann, Peter and Schwardmann, Peter, Spin Doctors: A Model and an Experimental Investigation of Vague Disclosure (2018). CESifo Working Paper No. 7244, Available at SSRN: https://ssrn.com/abstract=3275418 or http://dx.doi.org/10.2139/ssrn.3275418

Marvin Deversi (Contact Author)

Ludwig Maximilian University of Munich (LMU) - Faculty of Economics ( email )

Ludwigstrasse 28
Munich, D-80539
Germany

Alessandro Ispano

CY Cergy Paris Université ( email )

33 boulevard du Port
Cergy-Pontoise, 95011
France

Peter Schwardmann

Ludwig Maximilian University of Munich (LMU) - Faculty of Economics ( email )

Ludwigstrasse 28
Munich, D-80539
Germany

HOME PAGE: http://https://sites.google.com/site/peterschwardmann/

Ludwig Maximilian University of Munich (LMU) ( email )

Geschwister-Scholl-Platz 1
Munich, DE Bavaria 80539
Germany

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