Journal Article10.1086/596117
Conflicts of Interest, Disclosure, and (Costly) Sanctions: Experimental Evidence
Bryan K. Church,Xi (Jason) Kuang +1 more
TL;DR: In this article, the authors conduct a laboratory experiment focusing on behavior in an investor/financial adviser dyad, including important representative features in this setting, finding that investors are better off when conflicts of interest are disclosed and sanctions are available, even though initiating sanctions is costly to investors.
read more
Abstract: Conflicts of interest may compromise individuals’ independence in providing advisory services. Full disclosure is a commonly recommended remedy for the adverse effect of conflicts of interest. Yet prior study shows that disclosure may not have the intended effect because it provides individuals with moral license to engage in self‐interested behavior, thereby exacerbating biases. We follow up on this research and seek to determine whether other institutional factors may negate the potentially harmful effects of disclosure. We conduct a laboratory experiment, focusing on behavior in an investor/financial adviser dyad, including important representative features in this setting. Our results suggest that disclosure is not necessarily detrimental. We find that investors are better off when conflicts of interest are disclosed and sanctions are available, even though initiating sanctions is costly to investors. Under such conditions, advisers’ bias is dampened markedly.
read more
Chat with Paper
AI Agents for this Paper
Find similar papers on Google Scholar, PubMed and Arxiv
Write a critical review of this paper
Analyze citations of this paper to find unaddressed research gaps
Citations
When Sunlight Fails to Disinfect: Understanding the Perverse Effects of Disclosing Conflicts of Interest
TL;DR: In this paper, the authors introduce a conceptual model of disclosure's effects on advisors and advice recipients that helps to explain when and why disclosure can backfire, hurting those whom it is intended to protect.
The burden of disclosure: increased compliance with distrusted advice.
TL;DR: In this article, the authors present six experiments that reveal a previously unrecognized perverse effect of disclosure: although disclosure can decrease advisees' trust in the advice, it can also increase pressure to comply with that advice if advisees feel obliged to satisfy their advisors' personal interests.
The Burden of Disclosure: Increased Compliance with Distrusted Advice
TL;DR: 6 experiments are presented that reveal a previously unrecognized perverse effect of disclosure, which can decrease advisees' trust in the advice and increase pressure to comply with that advice if advisees feel obliged to satisfy their advisors' personal interests.
Patient responses to physician disclosures of industry conflicts of interest: A randomized field experiment
Susannah L. Rose,Sunita Sah,Raed A. Dweik,Cory Schmidt,Mary Beth Mercer,Ariane Mitchum,Michael W. Kattan,Matthew Karafa,Christopher T. Robertson +8 more
TL;DR: It is highlighted that although mailed financial conflict of interest disclosures are effective as an educational tool, disclosure cannot be a panacea to addressing physician-industry relationships if the intended purpose is for patients to assimilate the information into their decision-making and account for potential physician bias.
26
Conflict of interest disclosure as a reminder of professional norms: Clients first!
TL;DR: The authors show that disclosure of the conflict of interest can increase as well as decrease bias in advice, depending on whether the perceived norms of the context in which the advice is provided are "clients first" or "self-interests first".
21
References
•Book
Design and Analysis - A Researcher's Handbook
Geoffrey Keppel
- 01 Jan 1982
TL;DR: Within-subject and mixed designs of Factorial Design have been studied in this article, where the Principal Two-Factor Within-Factor Effects and Simple Effects have been used to estimate the effect size and power of interaction components.
6.6K
Risk Aversion and Incentive Effects
Charles A. Holt,Susan K. Laury +1 more
TL;DR: In this article, a menu of paired lottery choices is structured so that the crossover point to the high-risk lottery can be used to infer the degree of risk aversion, and a hybrid utility function with increasing relative and decreasing absolute risk aversion nicely replicates the data patterns over this range of payoffs from several dollars to several hundred dollars.
•Posted Content
The Economic Theory of Agency: The Principal's Problem.
TL;DR: The canonical agency problem can be posed as follows as discussed by the authors : the agent may choose an act, aCA, a feasible action space, and the random payoff from this act, w(a, 0), will depend on the random state of nature O(EQ the state space set), unknown to the agent when a is chosen.
Strategic information transmission
Vincent P. Crawford,Joel Sobel +1 more
TL;DR: In this article, the authors developed a model of strategic communication in which a better-informed Sender (S) sends a possibly noisy signal to a Receiver (R), who then takes an action that determines the welfare of both.
4K
Cooperation and Punishment in Public Goods Experiments
Ernst Fehr,Simon Gächter +1 more
TL;DR: In this paper, the authors show that there is a widespread willingness of the cooperators to punish the free-riders, even if punishment is costly and does not provide any material benefits for the punisher.
3.9K
Related Papers (5)
Amos Tversky,Daniel Kahneman +1 more
- 01 Jan 1974
Archon Fung,Mary Graham,David Weil +2 more
- 01 Mar 2007