Template-Type: ReDIF-Paper 1.0
Title: Hidden Testing and Selective Disclosure of Evidence
Author-Name: Claudia Herresthal
Author-Email: claudia.herresthal@unibonn.de



Classification-JEL: D83, D82
Keywords: endogenous information acquisition, verifiable disclosure, transparency, questionable research practices

Abstract: An agent can sequentially run informative tests about an unknown state and disclose (some or all) outcomes to a decision maker who then faces an approval choice. Players agree on the optimal choice under certainty, but the decision maker has a higher approval threshold than the agent. I compare the case where testing is hidden and the agent chooses which test outcomes to verifiably disclose to the case where testing is observable. When testing is observable, I show that the agent may strategically stop testing even if further tests could yield a mutual benefit. I find conditions under which the decision maker is strictly better off under hidden testing and in some equilibria both players are strictly better off under hidden testing than in the unique equilibrium under observable testing.

Note: 
Length: 37
Creation-Date: 2020-01
Revision-Date: 
File-URL: https://www.crctr224.de/research/discussion-papers/archive/dp145
Handle: RePEc:bon:boncrc:CRCTR224_2020_145v1