Featured Research

from universities, journals, and other organizations

A study of house prices: Do the benefits of disclosure outweigh the risks?

Date:
July 20, 2010
Source:
University of Chicago Press Journals
Summary:
Most of us think that disclosing a conflict of interest is a positive step, but a new study shows that disclosure can often backfire and make a bad situation worse.

Most of us think that disclosing a conflict of interest is a positive step, but a new study in the Journal of Consumer Research shows that disclosure can often backfire and make a bad situation worse.

"Our research suggests that people tend to think it is ethically more permissible to give manipulative advice once a conflict of interest has been disclosed," write authors Daylian M. Cain (Yale University), George Loewenstein, and Don A. Moore (both Carnegie Mellon University).

"At first glance, disclosure seems like a sensible remedy to a situation in which one party possesses an otherwise hidden incentive to mislead another party," the authors explain. "It might be easier to disclose that one is on the gravy train than to be forced to disembark," the authors write.

In the study, the researchers had groups of people estimate the sale prices of a set of houses. Estimators were paired with advisors who had access to better information for evaluating the prices. The estimators' pay was based on how accurate they were. Some advisors were paid according to how accurate their paired estimators were, but others were given an incentive to mislead the estimators. Some estimators knew whether or not their advisors had motivations aligned with theirs (via disclosure) and some did not.

"Advisors with a conflict of interest, whether disclosed or not, tried to mislead their estimators, recommending property values higher than their own personal estimates," the authors write. "But advisors whose conflict of interest had been disclosed gave recommendations that were much more inflated than those of advisors whose conflicts had not been disclosed. And even though the estimators knew the advice was biased, they did not sufficiently discount the advice."

The benefits of disclosure are easy to overestimate, the authors write, but transparency is still desirable. "As long as disclosure is not viewed as a substitute for the elimination of conflict, and as long as disclosed information is interpretable by those who receive it (and not written in fine-point legalese), the benefits of disclosure may outweigh the risks."


Story Source:

The above story is based on materials provided by University of Chicago Press Journals. Note: Materials may be edited for content and length.


Journal Reference:

  1. Daylian M. Cain, George Loewenstein, and Don A. Moore. When Sunlight Fails to Disinfect: Understanding the Perverse Effects of Disclosing Conflicts of Interest. Journal of Consumer Research, February 2011

Cite This Page:

University of Chicago Press Journals. "A study of house prices: Do the benefits of disclosure outweigh the risks?." ScienceDaily. ScienceDaily, 20 July 2010. <www.sciencedaily.com/releases/2010/07/100720123647.htm>.
University of Chicago Press Journals. (2010, July 20). A study of house prices: Do the benefits of disclosure outweigh the risks?. ScienceDaily. Retrieved July 29, 2014 from www.sciencedaily.com/releases/2010/07/100720123647.htm
University of Chicago Press Journals. "A study of house prices: Do the benefits of disclosure outweigh the risks?." ScienceDaily. www.sciencedaily.com/releases/2010/07/100720123647.htm (accessed July 29, 2014).

Share This




More Science & Society News

Tuesday, July 29, 2014

Featured Research

from universities, journals, and other organizations


Featured Videos

from AP, Reuters, AFP, and other news services

Easier Nuclear Construction Promises Fall Short

Easier Nuclear Construction Promises Fall Short

AP (July 29, 2014) The U.S. nuclear industry started building its first new plants using prefabricated Lego-like blocks meant to save time and prevent the cost overruns that crippled the sector decades ago. So far, it's not working. (July 29) Video provided by AP
Powered by NewsLook.com
$15B Deal on Vets' Health Care Reached

$15B Deal on Vets' Health Care Reached

AP (July 28, 2014) A bipartisan deal to improve veterans health care would authorize at least $15 billion in emergency spending to fix a veterans program scandalized by long patient wait times and falsified records. (July 28) Video provided by AP
Powered by NewsLook.com
The Carbon Trap: US Exports Global Warming

The Carbon Trap: US Exports Global Warming

AP (July 28, 2014) AP Investigation: As the Obama administration weans the country off dirty fuels, energy companies are ramping-up overseas coal exports at a heavy price. (July 28) Video provided by AP
Powered by NewsLook.com
Russia Saves Gecko Sex Satellite, Media Has Some Fun With It

Russia Saves Gecko Sex Satellite, Media Has Some Fun With It

Newsy (July 27, 2014) The satellite is back under ground control after a tense few days, but with a gecko sex experiment on board, the media just couldn't help themselves. Video provided by Newsy
Powered by NewsLook.com

Search ScienceDaily

Number of stories in archives: 140,361

Find with keyword(s):
Enter a keyword or phrase to search ScienceDaily for related topics and research stories.

Save/Print:
Share:

Breaking News:
from the past week

In Other News

... from NewsDaily.com

Science News

Health News

Environment News

Technology News



Save/Print:
Share:

Free Subscriptions


Get the latest science news with ScienceDaily's free email newsletters, updated daily and weekly. Or view hourly updated newsfeeds in your RSS reader:

Get Social & Mobile


Keep up to date with the latest news from ScienceDaily via social networks and mobile apps:

Have Feedback?


Tell us what you think of ScienceDaily -- we welcome both positive and negative comments. Have any problems using the site? Questions?
Mobile: iPhone Android Web
Follow: Facebook Twitter Google+
Subscribe: RSS Feeds Email Newsletters
Latest Headlines Health & Medicine Mind & Brain Space & Time Matter & Energy Computers & Math Plants & Animals Earth & Climate Fossils & Ruins