Comments on Nothing To Declare

1. Comments on Nothing To Declare David Hoffman

2. Some things to declare • This is a remarkable research agenda which I’ve previously blogged about. • I make a trivial amount of money from my blogging • I will be using this research in my own future work • If I could figure out a way to monetize my research, I would

3. Highlighted findings • When COI is immutable, disclosure of COI is perverse for both advisors and advisees. • When COI is mutable, disclosure is curative for advisees • Under some circumstances, voluntary disclosure is as curative as mandatory disclosures • Thus, when COIs are avoidable, disclosure isn’t perverse

4. Some minor quibbles • Are there gender effects? Other demographic effects? • How was an 83% response rate to internet solicitation achieved? • These experiments have become somewhat well-known: any chance of contamination in the pool?

5. Digging into immutable COIs • Paper puts subjects in the position of being able to avoid/not-avoid a COI. Subjects who selected out of COI were never in the position of conflict. • In life, COIs typically creep up on us – most of the time, we are conflicted at the decision-point. We can renounce the gains (indeed, law might compel it) but it’s harder to avoid the COI in the first instance. • And what does it mean, in reality, to have an unavoidable conflict? Almost all conflicts can be avoided given sufficient effort and expense. • Why not test the relationship between difficulty of exit and advice giving? • Put subjects in conflict position as a default and see what they do • Have them do two rounds of the experiment to see how they learn from the feeling of being in conflict

6. (Perceived) Sophistication of Advisees • Paper finds that where voluntary disclosure will be noticed by advisees, there are few DV differences between mandatory and voluntary disclosures • Legal regimes might then possibly differ based on the sophistication of the audience. • But it’s only the perceived sophistication of the audience that matters. • Are there ways we can trick advisors into thinking advisees are more sophisticated than they are?

7. Moral Licensing & the Law • Legal disclosure obligations typically fall on fiduciaries. Paper suggests – briefly – that fiduciary relationship could mediate the effect of both beneficent and perverse disclosure. • Next paper? Make advisors feel like fiduciaries • code of conduct • a story about good behavior • professional subjects • Contrasting intuitions: fiduciary conflicts are morally nondischargeable, but law permits disclosure to cure them • Would knowledge of fiduciary law (“abstain or disclose”) reinvigorate perverse effect?

8. Agency and Disclosure What if the advisor’s COI benefits a third party? • Employees of a conflicted firm or working for a client or assigned benefits to unknown third party • Hypothesis: less likely to see an effect based on selecting into COI regime, since moral licensing effect is likely to disappear. • Mediated by how closely related the third-party is to the advisor

9. Contracts and Disclosure What if the advisee’s relationship to the advisor is proximate? • Internal to contract relationship, parties often ask for new terms and must disclose COI. (Think Facebook.) Research Question: Is disclosure internal to contract relationship treated the same as disclosure during bargaining? Research Question: Would it matter if you are assigned to a contract which put you in a position of conflict?