Academic

Cain, Lowenstein, and Moore on Disclosing Conflicts

By Lawrence Solum

Daylian M. Cain , George Loewenstein and Don A. Moore (Yale School of Management , Carnegie Mellon University - Department of Social and Decision Sciences and Carnegie Mellon University - David A. Tepper School of Business) have posted The Dirt on Coming Clean: Perverse Effects of Disclosing Conflicts of Interest on SSRN.  Here is the abstract:

Conflicts of interest can lead experts to give biased and corrupt advice. Although disclosure is often proposed as a potential solution to these problems, we show that it can have perverse effects. First, people generally do not discount advice from biased advisors as much as they should, even when advisors' conflicts of interest are honestly disclosed. Second, disclosure can increase the bias in advice because it leads advisors to feel morally licensed and strategically encouraged to exaggerate their advice even further. This means that while disclosure may [insufficiently] warn an audience to discount an expert-opinion, disclosure might also lead the expert to alter the opinion offered and alter it in such a way as to overcompensate for any discounting that might occur. As a result, disclosure may fail to solve the problems created by conflicts of interest and it may sometimes even make matters worse.

Very interesting paper--I usually don't post older papers (this is from 2003), but I am curious whether there has been any confirmation or critique of this research.  Comments are open on this post.

Full post as published by Legal Theory Blog on January 13, 2009 (boomark / email).