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Adaptive Skepticism in the Face of Uncertainty: An Experimental Study on Verifiable Information Disclosure

Author

Listed:
  • Christian Koch

    (Department of Economics, University of Vienna)

  • Stefan P. Penczynski

    (School of Economics and Centre for Behavioural and Experimental Social Science, University of East Anglia)

  • Sihong Zhang

    (McKinsey & Company, Inc.)

Abstract

When sellers disclose verifiable information, buyers must exercise sufficient skepticism to account for potentially selective disclosure, yet previous evidence suggests they often fail to do so. We experimentally examine how buyers adapt their skepticism in response to uncertainty about the pool of available verifiable information. Contrary to previous findings on institutional manipulations in the literature, we discover that buyers adapt to our institutional change quite effectively, even if anything enhancing their skepticism. These results suggest that buyers' skepticism may adjust appropriately, or not, depending on the specific context, implying that consumer naivety may be less frequent, at least when real-world features prompt scrutiny.

Suggested Citation

  • Christian Koch & Stefan P. Penczynski & Sihong Zhang, 2025. "Adaptive Skepticism in the Face of Uncertainty: An Experimental Study on Verifiable Information Disclosure," Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) 25-02, School of Economics, University of East Anglia, Norwich, UK..
    • Handle: RePEc:uea:wcbess:25-02
    as

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    References listed on IDEAS

    as
    1. Rothschild, Michael, 1974. "A two-armed bandit theory of market pricing," Journal of Economic Theory, Elsevier, vol. 9(2), pages 185-202, October.
    2. Paul R. Milgrom, 1981. "Good News and Bad News: Representation Theorems and Applications," Bell Journal of Economics, The RAND Corporation, vol. 12(2), pages 380-391, Autumn.
    3. W. Kip Viscusi, 1978. "A Note on "Lemons" Markets with Quality Certification," Bell Journal of Economics, The RAND Corporation, vol. 9(1), pages 277-279, Spring.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Disclosure; verifiable information; competition; Peltzman effect;
    All these keywords.

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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