American Economic Review: Insights
ISSN 2640-205X (Print) | ISSN 2640-2068 (Online)
Breaking Bad News
American Economic Review: Insights
(pp. 233–46)
Abstract
We study how information disclosure shapes social learning about a potentially harmful product. Increased transparency helps early agents avoid harm, which may undermine learning by later agents. Despite this conflict of interest, we show that full transparency is uniquely optimal for all agents when they learn only by observing neighbors' harm. We investigate whether full transparency about harm continues to benefit all agents when they also learn from additional, imperfect signals.Citation
Meyer-ter-Vehn, Moritz ⓡ Simon Board. 2026. "Breaking Bad News." American Economic Review: Insights 8 (2): 233–46. DOI: 10.1257/aeri.20250043Additional Materials
JEL Classification
- D18 Consumer Protection
- D82 Asymmetric and Private Information; Mechanism Design
- D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
- L15 Information and Product Quality; Standardization and Compatibility