Economic Theory Centre

UNET Seminar: Paula Onuchic (University of Oxford)

C43 Sir Clive Granger
Monday 14th November 2022 (14:00-15:00)

Title  Advisors with hidden motives 

Abstract  I study a model of advisors with hidden motives: a seller discloses information about an object’s value to a potential buyer, who doesn’t know the object’s value or how profitable the object’s sale is to the seller (the seller’s motives). I characterize optimal disclosure rules, used by the seller to steer sales from lower- to higher-profitability objects. I investigate the effects of mandated transparency of the object’s profitability, and ask whether an advisee is always better off when they understand their advisor’s motives. The answer to this question may be negative: I show that, by removing the seller’s steering incentive, transparency can dissuade the seller from disclosing information about the object’s value, and also from acquiring that information in the first place. Finally, I consider variations of the communication protocol and show that the effect of transparency on the advisor’s informativeness is linked to their ability to commit to disclosure policies.

This is an in-person event.

Economic Theory Centre

School of Economics
Sir Clive Granger Building
University of Nottingham
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Nottingham, NG7 2RD