Working Paper BETA #2021-30

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Title : Information disclosure under liability: an experiment on public bads

Author(s) : Julien Jacob, Eve-Angéline Lambert, Mathieu Lefebvre, Sarah Van Driessche

Abstract : We experimentally investigate the impact of information disclosure on managing collective harms that are caused jointly by a group of liable agents. Subjects interact in a public bad setting and must choose ex ante how much to contribute in order to reduce the probability of causing a common damage. If a damage occurs, subjects bear a part of the loss according to the liability-sharing rule in force.We consider two existing rules: a per capita rule and a proportional rule. Our aim is to analyze the relative impact of information disclosure under each rule. We show that information disclosure increases contributions only under a per capita rule. This result challenges the classical results regarding the positive effects of information disclosure, since we show that this impact may depend upon the legal context. We also show that while a proportional rule leads to higher contributions than a per capita one, the positive effect of disclosure on a per capita rule makes it as efficient as a proportional rule without information disclosure.

Key-words : Information disclosure; Collective harms; Environmental Regulation; Liability Sharing Rules; Public Bads; Multiple Tortfeasors.

JEL Classification : C92; H41; K13; K32; Q53