Julia Salmi, Department of Economics, University of Copenhagen

"Dynamic Evidence Disclosure: Delay the Good to Accelerate the Bad"


It may be individually optimal to wait and learn from the experiences of others before investing in a new technology. However, informational free-riding is collectively harmful as it slows down innovation adoption. This paper studies the dynamic tradeoff between disclosure and generation of evidence. A welfare-maximizing designer can delay the disclosure of previously generated information in order to speed up adoption. The optimal policy transparently discloses bad news and delays good news. This finding resonates with regulation demanding that fatal breakdowns be reported promptly. Remarkably, the designer's intervention makes all agents better off.