Disclosure of Verifiable Information under Competition: An Experimental Study*

This study investigates experimentally the revelation of verifiable information in settings with and without seller competition. A higher level of competition has a positive and significant effect on the revelation of information. Throughout, sellers often choose to report a selected set of information and buyers on average account for this by bidding less than the reported average. However, buyers are on average not fully compensating the sellers’ selection of evidence and, surprisingly, do particularly poorly in the competitive setting. Further, we investigate the sellers’ option to purchase additional information, unobserved by the buyers. Here, the stronger selection upon purchase is counterbalanced by an overall stronger compensation on the buyer side, on average lowering buyers’ overbidding compared to the benchmark cases.