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STICERD Economic Theory Seminars

Information Acquisition and Disclosure by Advisors with Hidden Motives

Paula Onuchic (New York University/University of Oxford)

Thursday 18 March 2021 15:30 - 17:00

Due to the onging coronavirus outbreak, many of our seminars and public events this year will continue as online seminars. Please check our website listings and Twitter feed @STICERD_LSE for updates.

About this event

A sender acquires a signal about an object’s quality and commits to a rule to disclose its realizations to a receiver, who then chooses to buy the object or to keep an outside option of privately known value. Optimal disclosure rules typically conceal negative signal realizations when the object’s sale is very profitable to the sender and positive signal realizations when the sale is less profitable. Using such disclosure rules, the advisor is able to steer sales from lower to higher-profitability objects. I show that, despite this strategic concealment of some signal realizations, the receiver may prefer being informed by a non-transparent sender, because the sender’s hidden motives produce an additional incentive to invest in acquiring a precise signal of the object’s quality. I use my model to evaluate policies commonly proposed in the context of financial advisors, such as mandatory disclosure of commissions and commission caps.

Economic Theory Seminars are held on Thursdays in term time at 15:30-17:00, ONLINE, unless specified otherwise.

Seminar organisers: Dr Andrew Ellis and Dr Francesco Nava.

For further information please contact Annie-Rose Nicholas by email:

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