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- Title
Optimal disclosure decisions when there are penalties for nondisclosure.
- Authors
Dye, Ronald A.
- Abstract
We study a seller of an asset who is liable for damages if the seller fails to disclose to buyers an estimate of the asset's value he knew prior to the sale. Our results include as either the 'damages multiplier' that determines the size of the damages the seller must pay buyers increases, or as the probability the seller is caught withholding his estimate from buyers increases, the seller discloses his estimate less often, and as the precision of the seller's estimate increases, he sells a larger fraction of the asset.
- Subjects
NONDISCLOSURE; SELLING; LEGAL liability; DISCLOSURE; FINES (Penalties)
- Publication
RAND Journal of Economics (Wiley-Blackwell), 2017, Vol 48, Issue 3, p704
- ISSN
0741-6261
- Publication type
Article
- DOI
10.1111/1756-2171.12197