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Voluntary Disclosure And Earnings Expectations In Multi‐Level Marketing

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Listed:
  • Stacie A. Bosley
  • Sarah Greenman
  • Samantha Snyder

Abstract

Multi‐level marketing (MLM) firms recruit individuals into a business opportunity but are not required to disclose the earnings of past participants. Some MLMs voluntarily create income disclosures, which may serve both marketing and risk‐management functions. We create an economic experiment to explore the impact of MLM income disclosure on consumer interest and expectations. Results suggest that disclosure does not significantly alter interest in the business opportunity but does reduce expectations, on average, when subjects are asked to estimate annual income in a lab environment. We discuss findings in the context of current regulatory policy. (JEL D18, D82, M38)

Suggested Citation

  • Stacie A. Bosley & Sarah Greenman & Samantha Snyder, 2020. "Voluntary Disclosure And Earnings Expectations In Multi‐Level Marketing," Economic Inquiry, Western Economic Association International, vol. 58(4), pages 1643-1662, October.
    • Handle: RePEc:bla:ecinqu:v:58:y:2020:i:4:p:1643-1662
    DOI: 10.1111/ecin.12840
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • D18 - Microeconomics - - Household Behavior - - - Consumer Protection
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • M38 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Government Policy and Regulation

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