Evidence and Skepticism in Verifiable Disclosure Games

Strategic Withholding and Imprecision in Asset Measurement

“…As in our model, there are potential benefits from imprecise disclosures. Rappoport (2017) shows that the changes in the distribution of the information that make the sender less certain about the information translate into lower skepticism by the receiver, and would in many settings increase disclosure. In our model, the mechanism partially controls this skepticism to affect the equilibrium level of disclosure.…”

“…If there are multiple equilibria in the voluntary disclosure subgame, we select the equilibrium with the highest ex ante expectation of firm value. Analogous equilibrium selection criteria are common in the disclosure literature (e.g., Kamenica and Gentzkow, 2011;Hart, Kremer and Perry, 2017;Rappoport, 2017).…”

Costless Information and Costly Verification: A Case for Transparency

“…Thus, the proposed mechanism does not convey any information to the agent. However, since the optimal mechanism we derive is EPIC, it also constitutes a solution to the informed-principal game in which the principal proposes a mechanism only after observing her private signal: this game has a separating equilibrium in which the principal proposes one mechanism for each signal realization and, thus, the agent perfectly learns the signal from the 28 Mechanism design with alternative verification technologies or evidence is studied in Green and Laffont (1986), Bull and Watson (2004), Glazer and Rubinstein (2004), Deneckere and Severinov (2008), Kartik and Tercieux (2012), Hart, Kremer, and Perry (2017), Mylovanov and Zapechelnyuk (2017), Ball andKattwinkel (2019), Ben-Porath, Dekel, andLipman (2019), Epitropou and Vohra (2019), and Koessler and Perez-Richet (2019), as well as Rappoport (2020). More recently, Silva (2021) studies a model with an analogous informational setup where the principal's verification is costless but yields imperfect results.…”

Cheap Talk With Transparent Motives

“… Our assumption of sender state‐independent preferences is common in the literature on communication with hard evidence (e.g., Glazer and Rubinstein (, ), Hart, Kremer, and Perry (), Rappoport ()). Many such studies explore sufficient conditions for receiver‐ (rather than sender‐) optimal equilibria to replicate receiver (rather than sender) commitment. …”