The Failure of Mandated Disclosure

February 1, 2011   •  By IFS staff   •    •  

In this article, Omri Ben-Shahar and Carl E. Schneider examine a variety of disclosure mandates to assess the overall utility of disclosure. As disclosure requirements can be found in a variety of areas, from campaign finance, insurance, and telecommunications to sales of goods and services, leases, and contracts, the authors were able to scrutinize the utility of this mandate from a multitude of views. Throughout this article, Ben-Shahar and Schneider document the failure of mandated disclosure to both inform people and improve their decisions. Because the incentives behind disclosure encourage excess, the authors note that disclosure is often extensive and overly broad, perversely misinforming those it intends to help. In this vein, the authors believe that mandated disclosure fails to achieve its goals and recommends that disclosure requirements be kept short, in order to better aid those seeking information. To this point, the authors’ comprehensive study is instructive in the campaign finance arena and calls into question the mantra many repeat that more disclosure is inherently better.

IFS staff

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