Disclosure of information under competition: An experimental study

The theory of voluntary disclosure information posits that market forces lead firms (senders) to disclose through a process unravelling. This prediction requires consumers (receivers) hold correct beliefs and, in equilibrium, make adverse inferences about non-disclosed information. Previous research finds receivers are naïve and do not sufficiently infer non-disclosure as bad news, leading the failure complete paper experimentally examines whether competition between senders increases unravelling decreases receivers' naivety We find while fails occur, significantly overall welfare. Receivers' welfare despite no significant difference their guesses or relative treatment without competition, this is driven by higher rates senders. conclude positively affects