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Disclosure of Information in regulatory Proceedings

  • Lewis, T.
  • Poitevin, M.

This paper examines how different rules for presentation of evidence affect verdicts in regulatory hearings and the welfare and efficiency properties these procedures exhibit. The hearing is modeled as a game of imperfect information in which the respondent is privately informed about validity of his case. The respondent may present evidence to support his case. The commission observes whether the respondent presents evidence, and the nature of the evidence presented to update its beliefs about the validity of the case. Based on these beliefs and the standard of proof for conviction, the commission decides whether the respondent's application should be accepted or rejected. The sequential equilibria of this game are examined for their implications regarding (i) the desirability of making disclosure of evidence mandatory rather than voluntary, (ii) the burden of proof undertaken by the respondent to prove his case, and (iii) the impact of information accuracy and disclosure costs on the outcome of the hearing and the welfare of the respondents. Ce papier étudie comment différentes règles pour la production de preuves peuvent influencer la prise de décision d'une agence de réglementation ainsi que les propriétés de bien-être de ces règles. Une firme réglementée possède une information privée quant à la validité de sa requête et peut produire des éléments de preuve pour la soutenir. Une agence de réglementation observe la preuve présentée par la firme et se forme alors une opinion sur la validité de la requête. Les équilibres de ce jeu sont caractérisés et les points suivants sont étudiés : (i) la production de certains éléments doit-elle être obligatoire ou volontaire ? (ii) quelles sont les conséquences du fardeau de la preuve que la firme doit supporter ? (iii) quel est l'impact de la précision de la preuve et des coûts associés à sa produciton sur la décision de l'agence et le bien-être de la firme ?

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Paper provided by Universite de Montreal, Departement de sciences economiques in its series Cahiers de recherche with number 9414.

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Length: ; 35 pages
Date of creation: 1994
Date of revision:
Handle: RePEc:mtl:montde:9414
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  1. Paul R. Milgrom, 1979. "Good Nevs and Bad News: Representation Theorems and Applications," Discussion Papers 407R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  2. Reinganum, Jennifer F., 1986. "Plea Bargaining and Prosecutorial Discretion," Working Papers 616, California Institute of Technology, Division of the Humanities and Social Sciences.
  3. Paul R. Milgrom & John Roberts, 1985. "Relying on the Information of Interested Parties," Cowles Foundation Discussion Papers 749, Cowles Foundation for Research in Economics, Yale University.
  4. In-Koo Cho & David M. Kreps, 1997. "Signaling Games and Stable Equilibria," Levine's Working Paper Archive 896, David K. Levine.
  5. Jennifer F. Reinganum & Louise L. Wilde, 1986. "Settlement, Litigation, and the Allocation of Litigation Costs," RAND Journal of Economics, The RAND Corporation, vol. 17(4), pages 557-566, Winter.
  6. Fishman, Michael J & Hagerty, Kathleen M, 1990. "The Optimal Amount of Discretion to Allow in Disclosure," The Quarterly Journal of Economics, MIT Press, vol. 105(2), pages 427-44, May.
  7. Grossman, S J & Hart, O D, 1980. " Disclosure Laws and Takeover Bids," Journal of Finance, American Finance Association, vol. 35(2), pages 323-34, May.
  8. Grossman, Sanford J, 1981. "The Informational Role of Warranties and Private Disclosure about Product Quality," Journal of Law and Economics, University of Chicago Press, vol. 24(3), pages 461-83, December.
  9. Kreps, David M. & Wilson, Robert, 1982. "Reputation and imperfect information," Journal of Economic Theory, Elsevier, vol. 27(2), pages 253-279, August.
  10. Png, I. P. L., 1987. "Litigation, liability, and incentives for care," Journal of Public Economics, Elsevier, vol. 34(1), pages 61-85, October.
  11. Banks, Jeffrey S & Sobel, Joel, 1987. "Equilibrium Selection in Signaling Games," Econometrica, Econometric Society, vol. 55(3), pages 647-61, May.
  12. I.P.L. P'ng, 1983. "Strategic Behavior in Suit, Settlement, and Trial," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 539-550, Autumn.
  13. Grossman, Gene M & Katz, Michael L, 1983. "Plea Bargaining and Social Welfare," American Economic Review, American Economic Association, vol. 73(4), pages 749-57, September.
  14. Daniel L. Rubinfeld & David E.M. Sappington, 1987. "Efficient Awards and Standards of Proof in Judicial Proceedings," RAND Journal of Economics, The RAND Corporation, vol. 18(2), pages 308-315, Summer.
  15. Salant, Stephen W., 1984. "Litigation of Settlement Demands Questioned by Bayesian Defendants," Working Papers 516, California Institute of Technology, Division of the Humanities and Social Sciences.
  16. Dye, Ronald A, 1986. "Proprietary and Nonproprietary Disclosures," The Journal of Business, University of Chicago Press, vol. 59(2), pages 331-66, April.
  17. Lucian Arye Bebchuk, 1984. "Litigation and Settlement under Imperfect Information," RAND Journal of Economics, The RAND Corporation, vol. 15(3), pages 404-415, Autumn.
  18. Joseph Farrell, 1985. "Voluntary Disclosure: Robustness of the Unraveling Result, and Comments on Its Importance," Working papers 374, Massachusetts Institute of Technology (MIT), Department of Economics.
  19. Cooter, Robert D & Rubinfeld, Daniel L, 1989. "Economic Analysis of Legal Disputes and Their Resolution," Journal of Economic Literature, American Economic Association, vol. 27(3), pages 1067-97, September.
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