Is it always wise to disclose good news? When both the sender and the receiver have private information about the sender's quality, we find that the worst sender type 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, nondisclosure equilibria exist in which good news is withheld. Since the sender has a legitimate fear of looking too eager 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 faculty use titles such as 'Dr' and 'Professor' in voicemail greetings and course syllabi.
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- Crawford, Vincent P & Sobel, Joel, 1982.
"Strategic Information Transmission,"
Econometric Society, vol. 50(6), pages 1431-1451, November.
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