A more general framework to analyze whether voluntary disclosure is insufficient or excessive

0439518 - NHU-C 2015 RIV US eng J - Journal Article
Celik, Levent
A more general framework to analyze whether voluntary disclosure is insufficient or excessive.
Review of Industrial Organization. Roč. 44, č. 2 (2014), s. 161-178. ISSN 0889-938X. E-ISSN 1573-7160
Grant - others:UK(CZ) UNCE 204005/2012
Institutional support: PRVOUK-P23
Keywords : monopoly * quality uncertainty * verifiable information disclosure
Subject RIV: AH - Economics
Impact factor: 0.586, year: 2014

I analyze if the excessive quality disclosure finding of the “classical literature” extends to environments in which consumers have a downward-sloping demand. While the answer is affirmative, there are at least two situations under which disclosure is socially insufficient: (1) when there are quality levels that are too low to generate any positive demand; and (2) when the prior beliefs place sufficiently higher weight on lower qualities. In both cases, non-disclosure by the seller leads to a severe reduction in the perceived quality, thereby significantly lowering the demand and the quantity consumed.
Permanent Link: http://hdl.handle.net/11104/0244319