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On the Optimality of Full Disclosure

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The RAND Journal of Economics

Published online on

Abstract

["The RAND Journal of Economics, EarlyView. ", "\nABSTRACT\nA privately informed sender can commit to any disclosure policy toward a receiver, whose actions affect the utility of the sender. We show that full disclosure is optimal under a sufficient condition with some desirable properties. First, it speaks directly to the parties' utility functions, as opposed to the sender's indirect utility function; this makes it easily interpretable and verifiable. Second, it does not require the sender's payoff to be a function of the posterior mean state. Third, it is weaker than the conditions obtained in the literature for some specific settings."]