The Burden of Disclosure: Increased Compliance with Distrusted Advice

Date, Time, Venue

7 October 2011, Friday 15.30-16.45

University College London

1st floor Exec-Ed room, 

Engineering Front Building
("Malet place" in Google maps)

Abstract

Although disclosure is often proposed as a solution to problems caused by conflicts of interest, prior research has found both positive and negative effects of disclosure.  On the downside, disclosure can worsen advice and fail to cause sufficient discounting.  We present six experiments that hold advice constant to reveal a previously unrecognized perverse effect of disclosure: While disclosure can decrease advisees’ trust in the advice, it simultaneously increases pressure to comply with that same advice.  This compliance pressure comes from two mechanisms: recipients (1) fear signaling distrust of advisors, and (2) feel an increased pressure to help satisfy their advisors’ personal interests when those interests have been disclosed.  Hence, disclosure can burden those it is ostensibly intended to protect.  We show that the increased pressure to comply is reduced if (1) the disclosure is provided by an external source rather than from the advisor, (2) the disclosure is not common knowledge between the advisor and advisee, (3) a cooling-off period is introduced, or, (4) the advisee can make the decision in private.

Bio

Sunita Sah is a Post-Doctoral Associate at The Fuqua School of Business at Duke University and a Research Fellow at the Edmond J. Safra Ethics Center, Harvard University. She holds a PhD in Organizational Behavior from Carnegie Mellon University, an MBA from London Business School, an MB ChB (UK equivalent to the US MD) in Medicine and Surgery, and a BSc in Psychology from the University of Edinburgh.

Sunita’s research focus is on organizational corruption, business ethics, and advice-giving – in particular how professionals who give advice alter their behavior as a result of conflicts of interest and disclosure policies. Sunita incorporates psychology and behavioral economics theory to study different aspects of giving, and reacting to, biased or over-confident advice. Her work has been published in the Academy of Management Proceedings, Journal of the American Medical Association, American Economic Review, and Social Psychological and Personality Science.She also has an invited revision from the Journal of Personality and Social Psychology and her work has been featured in The Wall Street Journal, Bloomberg BusinessWeek, The New York Times, Boston Globe, National Public Radio as well as other international outlets.

Sunita has won best paper awards from the Academy of Management, Society of Business Ethics, and London Business School, and scholar awards from Harvard University, the International Association of Conflict Management and Dispute Resolution Center (Kellogg School of Management), the Medical Research Council (UK), and the National Science Foundation (US).  

Prior to entering an academic career, Sunita was Managing Director of Organisational Dynamics Ltd (a UK based consultancy and training company), European Marketing Director and Senior Consultant at IMS Health, and a Medical Doctor in General Medicine.