Truthful Disclosure of Information
Volume: Volume 13, No. 1
Issue: Spring 1982
Pages: pp. 36-44
Authors: Boyan Jovanovic
Title: Truthful Disclosure of Information
Abstract: This article is about disclosure of quality. The question that it seeks to answer is: Does the free market offer enough incentive for business to disclose? The article concludes that whether information is of purely private value or not, more than the socially-optimal amount of disclosure takes place. The optimal policy is for the government to subsidize sale without disclosure. The article offers no support for the policy of mandatory disclosure. The results should be viewed with care, however, as they seem to depend on special features of the model, in particular the assumed impossibility of misrepresentation.
JEL Classification
Welfare Theory General (0240)
Economics of Uncertainty and Information; Game Theory and Bargaining Theory: General (0260)
Regulation of Public Utilities (6130)