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On the optimality of full disclosure

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  • Emiliano Catonini
  • Sergey Stepanov

Abstract

A privately-informed sender can commit to any disclosure policy towards a receiver. We show that full disclosure is optimal under a sufficient condition with some desirable properties. First, it speaks directly to the utility functions of the parties, as opposed to the indirect utility function of the sender; this makes it easily interpretable and verifiable. Second, it does not require the sender's payoff to be a function of the posterior mean. Third, it is weaker than the known conditions for some special cases. With this, we show that full disclosure is optimal under modeling assumptions commonly used in principal-agent papers.

Suggested Citation

  • Emiliano Catonini & Sergey Stepanov, 2022. "On the optimality of full disclosure," Papers 2202.07944, arXiv.org, revised Feb 2023.
    • Handle: RePEc:arx:papers:2202.07944
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    References listed on IDEAS

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    1. repec:hal:pseose:halshs-01313694 is not listed on IDEAS
    2. Kolotilin, Anton, 2018. "Optimal information disclosure: a linear programming approach," Theoretical Economics, Econometric Society, vol. 13(2), May.
    3. Piotr Dworczak & Giorgio Martini, 2019. "The Simple Economics of Optimal Persuasion," Journal of Political Economy, University of Chicago Press, vol. 127(5), pages 1993-2048.
    4. Anton Kolotilin & Alexander Wolitzky, 2020. "Assortative Information Disclosure," Discussion Papers 2020-08, School of Economics, The University of New South Wales.
    5. Dworczak, Piotr & Kolotilin, Anton, 2024. "The persuasion duality," Theoretical Economics, Econometric Society, vol. 19(4), November.
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    7. Philippe Jehiel, 2015. "On Transparency in Organizations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 82(2), pages 736-761.
    8. Luis Rayo & Ilya Segal, 2010. "Optimal Information Disclosure," Journal of Political Economy, University of Chicago Press, vol. 118(5), pages 949-987.
    9. Matthew Gentzkow & Emir Kamenica, 2016. "A Rothschild-Stiglitz Approach to Bayesian Persuasion," American Economic Review, American Economic Association, vol. 106(5), pages 597-601, May.
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