On the optimality of full disclosure
Theoretical Economics
2023-02-15 v4
Abstract
A privately-informed sender can commit to any disclosure policy towards a receiver. We show that full disclosure is optimal under a sufficient condition with some desirable properties. First, it speaks directly to the utility functions of the parties, as opposed to the indirect utility function of the sender; this makes it easily interpretable and verifiable. Second, it does not require the sender's payoff to be a function of the posterior mean. Third, it is weaker than the known conditions for some special cases. With this, we show that full disclosure is optimal under modeling assumptions commonly used in principal-agent papers.
Keywords
Cite
@article{arxiv.2202.07944,
title = {On the optimality of full disclosure},
author = {Emiliano Catonini and Sergey Stepanov},
journal= {arXiv preprint arXiv:2202.07944},
year = {2023}
}