Skip to main content
Journal cover image

Strategic information disclosure: The case of multiattribute products with heterogeneous consumers

Publication ,  Journal Article
Hotz, VJ; Xiao, M
Published in: Economic Inquiry
January 1, 2013

We examine the incentives for firms to voluntarily disclose otherwise private information about the quality attributes of their products. In particular, we focus on the case of differentiated products with multiple attributes and heterogeneous consumers. We show that there exist certain configurations of consumers' multidimensional preferences under which a firm, no matter whether producing a high- or low-quality product, may choose not to reveal the quality even with zero disclosure costs. The failure of information unraveling arises when providing consumers with more information results in more elastic demand, which triggers more intensive price competition and leads to lower prices and profits for competing firms. As a result, the equilibrium in which disclosure is voluntary may diverge from that in which disclosure is mandatory. © 2011 Western Economic Association International.

Duke Scholars

Published In

Economic Inquiry

DOI

EISSN

1465-7295

ISSN

0095-2583

Publication Date

January 1, 2013

Volume

51

Issue

1

Start / End Page

865 / 881

Related Subject Headings

  • Economics
  • 3803 Economic theory
  • 3802 Econometrics
  • 3801 Applied economics
  • 14 Economics
 

Citation

APA
Chicago
ICMJE
MLA
NLM
Hotz, V. J., & Xiao, M. (2013). Strategic information disclosure: The case of multiattribute products with heterogeneous consumers. Economic Inquiry, 51(1), 865–881. https://doi.org/10.1111/j.1465-7295.2010.00340.x
Hotz, V. J., and M. Xiao. “Strategic information disclosure: The case of multiattribute products with heterogeneous consumers.” Economic Inquiry 51, no. 1 (January 1, 2013): 865–81. https://doi.org/10.1111/j.1465-7295.2010.00340.x.
Hotz, V. J., and M. Xiao. “Strategic information disclosure: The case of multiattribute products with heterogeneous consumers.” Economic Inquiry, vol. 51, no. 1, Jan. 2013, pp. 865–81. Scopus, doi:10.1111/j.1465-7295.2010.00340.x.
Journal cover image

Published In

Economic Inquiry

DOI

EISSN

1465-7295

ISSN

0095-2583

Publication Date

January 1, 2013

Volume

51

Issue

1

Start / End Page

865 / 881

Related Subject Headings

  • Economics
  • 3803 Economic theory
  • 3802 Econometrics
  • 3801 Applied economics
  • 14 Economics