Spin doctors: An experiment on vague disclosure

Revealing good deeds: disclosure of social responsibility in competitive markets

“…In particular, we might gain some insights as to whether buyers understand the strategic incentives of the sellers and hold unbiased beliefs. Given the evidence on limited strategic thinking in disclosure games (e.g., Jin et al 2021 ; Benndorf et al 2015 ; Deversi et al 2021 ), it would be possible that buyers make wrong inferences about what undisclosed donations in Choice-100 imply. Then, they may mistakenly pay higher prices than they would for offers where they know that donations are zero.…”

“…Beyond the literature on social responsibility, our paper also speaks to a literature on information disclosure in markets. Recent evidence (e.g., Jin et al 2021 ; Benndorf et al 2015 ; Deversi et al 2021 ) shows that people have difficulties interpreting non-disclosure as sufficiently negative information, severely limiting the kind of unraveling predicted when agents were sophisticated rather than boundedly rational. Given that in our Choice treatments buyers face a similar task, namely to infer the donation associated with undisclosed offers, it is worth pointing out that if disclosure is sufficiently unambiguous, our results show that buyers behave as if they can infer donations relatively well.…”

“…Importantly, if buyers do not to hold fully rational beliefs, as shown in recent experimental work on disclosure games (e.g., Jin et al 2021 ; Benndorf et al 2015 ; Deversi et al 2021 ), it might be possible that sellers could exploit such biased beliefs by profitably choosing more zero donations compared to Full Info , but not disclosing them to buyers. However, our setting differs from those disclosure games in a number of ways which means that we consider it an open question whether we should expect beliefs to be biased in our case.…”

Communication-Enhancing Vagueness

“…Benndorf et al [27] elicited a distribution of level-k types in a disclosure game, finding substantial numbers of k = 1, k = 2, and k = 3 players. Jin et al [28] and Deversi et al [29] both used state spaces and payoff functions very similar to those in my experiment. Jin et al [28] found that senders disclose favorable information but withhold less favorable information, and receivers are insufficiently skeptical when information is not disclosed.…”

“…Jin et al [28] found that senders disclose favorable information but withhold less favorable information, and receivers are insufficiently skeptical when information is not disclosed. Deversi et al [29] examined what occurs when senders can choose imprecise disclosures. They found that vagueness is profitably exploited by senders to take advantage of naive receivers, and information transmission is higher in their precise-only treatment.…”