Advice and Influence

Abstract Professionals face conflicts of interest when they have a personal interest in giving biased advice. Mandatory disclosure—informing consumers of the conflict—is a widely adopted strategy in numerous professions, such as medicine, finance, and accounting. Prior research has shown, however, that such disclosures have little impact on consumer behavior, and can backfire by leading advisors […]

Abstract Professionals often face conflicts of interest that give them an incentive to provide biased advice, and disclosure (informing advisees about the conflict) is frequently proposed as a solution to the problem. We present 6 experiments that reveal a previously unrecognized perverse effect of disclosure: Although disclosure can decrease advisees’ trust in the advice, it