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Spin Doctors: An Experiment on Vague Disclosure

Author

Listed:
  • Deversi, Marvin

    (LMU Munich)

  • Ispano, Alessandro

    (CY Cergy Paris Université, CNRS and THEMA)

  • Schwardmann, Peter

    (LMU Munich)

Abstract
Unfavorable news are often delivered under the disguise of vagueness. Our theory-driven laboratory experiment investigates this strategic use of vagueness in voluntary disclosure and asks whether there is scope for policy to improve information transmission. We find that vagueness is profitably deployed by senders to fool those receivers that lack strategic sophistication. Imposing precise disclosure leads to more easily interpretable messages, but results in fewer sender types disclosing at all. Since non-disclosure also systematically misleads naive receivers, the welfare implications of imposing precision are not obvious. However, our model and experiment show that information transmission and the welfare of naive receivers are improved by policies that impose precision. Our results speak to the rules governing firms’ disclosure of quality-relevant information, the disclosure of research findings, and testimonies in a court of law.

Suggested Citation

  • Deversi, Marvin & Ispano, Alessandro & Schwardmann, Peter, 2021. "Spin Doctors: An Experiment on Vague Disclosure," Rationality and Competition Discussion Paper Series 304, CRC TRR 190 Rationality and Competition.
    • Handle: RePEc:rco:dpaper:304
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    References listed on IDEAS

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    2. Luca Braghieri, 2023. "Biased Decoding and the Foundations of Communication," CESifo Working Paper Series 10432, CESifo.
    3. Jeanne Hagenbach & Charlotte Saucet, 2024. "Motivated Skepticism," Working Papers hal-03770685, HAL.
    4. Keh-Kuan Sun & Stella Papadokonstantaki, 2023. "Lying Aversion and Vague Communication: An Experimental Study," Papers 2301.00372, arXiv.org, revised Sep 2023.
    5. Sun, Keh-Kuan & Papadokonstantaki, Stella, 2023. "Lying aversion and vague communication: An experimental study," European Economic Review, Elsevier, vol. 160(C).
    6. Boris Knapp, 2021. "Fake Reviews and Naive Consumers," Vienna Economics Papers vie2102, University of Vienna, Department of Economics.
    7. Jeanne Hagenbach & Charlotte Saucet, 2024. "Motivated Skepticism," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-03770685, HAL.
    8. Matveenko, Andrei & Starkov, Egor, 2023. "Sparking curiosity or tipping the scales? Targeted advertising with consumer learning," Journal of Economic Behavior & Organization, Elsevier, vol. 213(C), pages 172-192.
    9. Tom Lane & Minghai Zhou, 2022. "Failure of unravelling theory? A natural field experiment on voluntary quality disclosure," Discussion Papers 2022-17, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    10. Anton Suvorov & Jeroen van de Ven & Marie Claire Villeval, 2024. "Selective Information Sharing and Group Delusion," Working Papers 2405, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    11. Jeanne Hagenbach & Charlotte Saucet, 2024. "Motivated Skepticism," SciencePo Working papers Main hal-03770685, HAL.
    12. Daniel H. Wood, 2022. "Communication-Enhancing Vagueness," Games, MDPI, vol. 13(4), pages 1-27, June.
    13. Alexander Coutts & Boon Han Koh & Zahra Murad, 2024. "The signals we give: Performance feedback, gender, and competition," Working Papers in Economics & Finance 2024-02, University of Portsmouth, Portsmouth Business School, Economics and Finance Subject Group.

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    More about this item

    Keywords

    communication; naïveté; flexibility; regulation;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation

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