IDEAS home Printed from https://ideas.repec.org/p/iuk/wpaper/2005-05.html

False Modesty: When Disclosing Good News Looks Bad

Author

Listed:
  • Rick Harbaugh

    (Department of Business Economics and Public Policy, Indiana University Kelley School of Business)

  • Theodore To

    (Bureau of Labor Statistics)

Abstract

Is it always wise to disclose good news? We find that the worst sender with good news has the most incentive to disclose it, so reporting good news can paradoxically make the sender look bad. If the good news is attainable by sufficiently mediocre types, or if the sender is already expected to be of a relatively high type, withholding good news is an equilibrium. Since the sender has a legitimate fear of looking too anxious to reveal good news, having a third party disclose the news, or mandating that the sender disclose the news, can help the sender. The predictions are tested by examining when economics faculty at different institutions use titles such as "Dr" and "Professor" in voicemail greetings and course syllabi.

Suggested Citation

  • Rick Harbaugh & Theodore To, 2005. "False Modesty: When Disclosing Good News Looks Bad," Working Papers 2005-05, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
    • Handle: RePEc:iuk:wpaper:2005-05
    as

    Download full text from publisher

    File URL: http://kelley.iu.edu/riharbau/RePEc/iuk/wpaper/bepp2005-05-harbaugh-to.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Rick Harbaugh & John W. Maxwell & Beatrice Roussillon, 2006. "The Groucho Effect of Uncertain Standards," Working Papers 2006-09, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
    2. David Butler & Daniel Read, 2021. "Unravelling Theory: Strategic (Non-) Disclosure of Online Ratings," Games, MDPI, vol. 12(4), pages 1-20, September.
    3. Cartwright, Edward & Patel, Amrish, 2013. "How category reporting can improve fundraising," Journal of Economic Behavior & Organization, Elsevier, vol. 87(C), pages 73-90.
    4. Bond, Philip & Zeng, Yao, 2022. "Silence is safest: Information disclosure when the audience’s preferences are uncertain," Journal of Financial Economics, Elsevier, vol. 145(1), pages 178-193.
    5. Cornago, Elisabetta & Dressler, Luisa, 2020. "Incentives to (not) disclose energy performance information in the housing market," Resource and Energy Economics, Elsevier, vol. 61(C).
    6. Hugo M. Mialon, 2012. "The Economics Of Faking Ecstasy," Economic Inquiry, Western Economic Association International, vol. 50(1), pages 277-285, January.
    7. Yi Qian & Qiang Gong & Yuxin Chen, 2015. "Untangling Searchable and Experiential Quality Responses to Counterfeits," Marketing Science, INFORMS, vol. 34(4), pages 522-538, July.
    8. Zheng, Panpan & Li, Zhen, 2025. "Financial judicial specialization and corporate information interaction: Evidence from the establishment of financial courts in China," Finance Research Letters, Elsevier, vol. 81(C).
    9. Lacetera, Nicola & Macis, Mario, 2010. "Social image concerns and prosocial behavior: Field evidence from a nonlinear incentive scheme," Journal of Economic Behavior & Organization, Elsevier, vol. 76(2), pages 225-237, November.
    10. Yi Qian & Qiang Gong & Yuxin Chen, 2013. "Untangling Searchable and Experiential Quality Responses to Counterfeits," NBER Working Papers 18784, National Bureau of Economic Research, Inc.
    11. Lacetera, Nicola & Macis, Mario & Slonim, Robert, 2009. "Will There Be Blood? Incentives and Substitution Effects in Pro-social Behavior," IZA Discussion Papers 4567, Institute of Labor Economics (IZA).
    12. Tom Lane & Minghai Zhou, 2022. "Failure of unravelling theory? A natural field experiment on voluntary quality disclosure," Discussion Papers 2022-17, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iuk:wpaper:2005-05. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Rick Harbaugh (email available below). General contact details of provider: https://edirc.repec.org/data/dpiubus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.