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Complex Disclosure

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  • Ginger Zhe Jin
  • Michael Luca
  • Daniel J. Martin

Abstract

We present evidence that unnecessarily complex disclosure can result from strategic incentives to shroud information. In our lab experiment, senders are required to report their private information truthfully, but can choose how complex to make their reports. We find that senders use complex disclosure over half the time. This obfuscation is profitable because receivers make systematic mistakes in assessing complex reports. Regression and structural analysis suggest that these mistakes could be driven by receivers who are naive about the strategic use of complexity or overconfident about their ability to process complex information.

Suggested Citation

  • Ginger Zhe Jin & Michael Luca & Daniel J. Martin, 2018. "Complex Disclosure," NBER Working Papers 24675, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:24675
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    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • K2 - Law and Economics - - Regulation and Business Law
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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