The Limits of Transparency: Pitfalls and Potential of Disclosing Conflicts of Interest

@article{Loewenstein2011TheLO,
  title={The Limits of Transparency: Pitfalls and Potential of Disclosing Conflicts of Interest},
  author={George Loewenstein and Daylian M. Cain and Sunita Sah},
  journal={The American Economic Review},
  year={2011},
  volume={101},
  pages={423-428}
}
We review evidence from our published and ongoing research that disclosing conflicts of interest has unintended consequences, helping conflicted advisors and harming their advisees: With disclosure, advisors feel comfortable giving more biased advice, but advisees do not properly adjust for this and generally fail to sufficiently discount biased advice. Disclosure also increases pressure on advisees to comply with advice; following disclosure, advisees feel more uncomfortable in turning down… 

When Sunlight Fails to Disinfect: Understanding the Perverse Effects of Disclosing Conflicts of Interest

Disclosure is often proposed as a remedy for conflicts of interest, but it can backfire, hurting those whom it is intended to protect. Building on our prior research, we introduce a conceptual model

Conflicted financial advice: disclosure revisited

ABSTRACT We examine the impact of disclosing an advisor’s conflict of interest in providing financial advice to a client in an experiment. We find that an advisor’s conflict of interest harms the

Disclosing Advisor's Interests Neither Hurts Nor Helps

We set up an experiment to study whether disclosure of the advisor's interests can foster truthfulness and trust. We measure how advisors expect decisionmakers to react to their advice in order to

Does Disclosure of Conflict of Interest Increase or Decrease Bias?

SUMMARY:  Corporate governance reforms and the threat-safeguard approach to auditor independence regulations are motivated by the assumption that disclosure by an agent (e.g., auditor) of a potential

Moral Licensing and Disclosure

Market participants continue to demand greater transparency from boards of directors, yet little is known about the effect of increased transparency on board member decisions. We provide initial

Insinuation Anxiety: Concern That Advice Rejection Will Signal Distrust After Conflict of Interest Disclosures

It is shown that disclosure of a financial or nonfinancial conflict of interest can have a perverse effect on the advisor–advisee relationship and insinuation anxiety persists whether the disclosure is voluntary or required by law and whether the disclosed conflict is big or small.

The unintended consequences of conflict of interest disclosure.

CONFLICTS OF INTEREST, BOTH FINANCIAL AND NONfinancial, are ubiquitous in medicine, and the most commonly prescribed remedy is disclosure. The Medicare Payment Advisory Commission and the Accountable

Effect of physician disclosure of specialty bias on patient trust and treatment choice

The impact of disclosures of bias on advisees is explored and it is found that disclosures of specialty bias increase patients’ trust and their likelihood of choosing a treatment in accordance with the physicians’ specialty.

Regulating Markets with Advice: An Experimental Study.

We present a newly designed market experiment to study regulatory issues in markets with advice inspired by the models of Inderst and Ottaviani (2012a) and Inderst (2015). In line with our

Regulating Markets with Advice: An Experimental Study*

We present a newly designed market experiment to study regulatory issues in markets with advice inspired by the models of Inderst and Ottaviani (2012a) and Inderst (2015). In line with our
...

References

SHOWING 1-10 OF 22 REFERENCES

The Dirt on Coming Clean: Perverse Effects of Disclosing Conflicts of Interest

It is shown that disclosure can have perverse effects and may fail to solve the problems created by conflicts of interest and may sometimes even make matters worse.

When Sunlight Fails to Disinfect: Understanding the Perverse Effects of Disclosing Conflicts of Interest

Disclosure is often proposed as a remedy for conflicts of interest, but it can backfire, hurting those whom it is intended to protect. Building on our prior research, we introduce a conceptual model

Conflicts of Interest, Disclosure, and (Costly) Sanctions: Experimental Evidence

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

Disclosing Conflicts of interest - Do Experience and Reputation Matter?

Disclosure of conflict of interest is currently seen as an effective tool for reducing threats to auditor independence. Cain, Loewenstein, and Moore (2005) provide evidence for perverse effects of

The Limits of Disclosure: What Research Subjects Want to Know about Investigator Financial Interests

Research participants' views about investigator financial interests were explored, and some said it did not matter, was private, or was burdensome, and other factors were more important to research decisions.

A trial of disclosing physicians' financial incentives to patients.

Among diverse patient populations, a single mailed disclosure letter from physician groups was associated with improved knowledge of physicians' compensation models and patients' trust in their physicians was unharmed, and their loyalty to their physician group was strengthened.

The limits of competing interest disclosures.

These findings are another example of how simply requiring authors to disclose financial ties with the tobacco industry may not be adequate to give readers a full picture of the author's relationship with the industry.

Full disclosure : the perils and promise of transparency

The present and future of disclosure are examined in detail in 18 major cases: Eighteen major cases of information-based regulation, Governance by transparency, and the future of disclosures.

Incentives and Prosocial Behavior

We develop a theory of prosocial behavior that combines heterogeneity in individual altruism and greed with concerns for social reputation or self-respect. Rewards or punishments (whether material or

Moral credentials and the expression of prejudice.

Three experiments supported the hypothesis that people are more willing to express attitudes that could be viewed as prejudiced when their past behavior has established their credentials as