Conferences at Department of Economics, University of Toronto, Canadian Economic Theory Conference 2024

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Dynamic Evidence Disclosure: Delay the Good to Accelerate the Bad

Jan Knoepfle*, Julia Salmi

Building: Rotman School of Management
Room: Room 1065
Last modified: 2024-05-02

Abstract


It may be individually optimal to wait and learn from the experiences of others before investing in a new technology. However, informational free-riding is collectively harmful as it slows down innovation adoption. This paper studies the dynamic tradeoff between disclosure and generation of evidence. A welfare-maximizing designer can delay the disclosure of previously generated information in order to speed up adoption. The optimal policy transparently discloses bad news and delays good news. This finding resonates with regulation demanding that fatal breakdowns  be reported promptly. Remarkably, the designer's intervention makes all agents better off. 

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