Working Paper

Voluntary disclosure under imperfect competition: Experimental evidence

Abstract: This study investigates disclosure behavior when a manager has incentives to influence the actions of a product market competitor in a Cournot duopoly. Theoretical research suggests that under various conditions the manager has incentives to withhold some signals and disclose others. Using an experimental economics method, we find support for partial information disclosure. Our results suggest that when the manager receives private information about industrywide cost, unfavorable (favorable) information is disclosed (withheld) and the competitor adjusts production accordingly. In contrast, when the manager receives private information about firm-specific cost, disclosure behavior is not affected by the favorableness of the information and the competitor's production decision is invariant to the disclosure choice.

Keywords: Information theory; Microeconomics;

Status: Published in International Journal of Industrial Organization, January 2000

Bibliographic Information

Provider: Federal Reserve Bank of Atlanta

Part of Series: FRB Atlanta Working Paper

Publication Date: 1998

Number: 98-7