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Tuesday, March 20, 2018 at 11:40am to 1:10pm
Sage Hall, 141
Johnson Graduate School-Management, 106 Sage Hall, Ithaca, NY 14853-6201, USA
Daniel Martin - Northwestern University
Complex Disclosure (Joint with Ginger Zhe Jin & Michael Luca)
Abstract: Using lab experiments, we implement a simple game of mandatory disclosure where senders are required to report their private information truthfully, but can choose how complex to make their reports. If senders choose a complex report, receivers must exert cognitive effort to correctly determine the sender’s private information. We find that senders use complex disclosure around half the time. This strategic obfuscation is profitable because receivers focus on analyzing complex reports, but ultimately do not account for their correctly skeptical beliefs. This mistake appears related to overconfidence about the ability to internalize complex information.