This paper examines experimentally the reputation building role of disclosure in an investment / trust game. It provides experimental evidence in support of sequential equilibrium behavior in a finitely repeated investment / trust game where information asymmetry raises the possibility of...

We analyse how soft information acquired at a cost by a lender affects the debt contract between the lender and a project manager, and the manager's incentive to invest in a specific asset. Under certain conditions, the lender chooses to acquire soft information about the profitability of the...

This experiment examines forecasting behavior under varying information conditions to assess the extent to which traders in security markets incorporate information in trading activity to resolve fundamental uncertainty and to resolve higher-order uncertainty. Fundamental uncertainty refers to a...

This article analyzes the role of information in building reputation in an investment/trust game. The model allows for information asymmetry in a finitely repeated sender-receiver game and solves for sequential equilibrium to show that if there are some trustworthy managers who always disclose...

A common view is that verified earnings reports encourage investment through improved transparency. We lack direct evidence on this foundational proposition because researchers cannot observe counterfactuals where a manager either: (1) must remain silent about performance or (2) can make any...

We examine the impact of public information on firms’ disclosure strategies. We portray two regimes based on a model that extends the setting of Dye (1985) and Jung and Kwon (1988). In the first regime, the firm is able to respond to public information and thus has the last word, and in the...