When is it bad to disclose good news?

by on February 17, 2006 at 7:51 am in Economics | Permalink

Rick Harbaugh and Theodore To offer an abstract:

Is it always wise to disclose good news?  We find that the worst sender with good news has the most incentive to disclose it, so reporting good news can paradoxically make the sender look bad.  If the good news is attainable by sufficiently mediocre types, or if the sender is already expected to be of a relatively high type, withholding good news is an equilibrium.  Since the sender has a legitimate fear of looking to anxious to reveal good news, having a third party disclose the news, or mandating that the sender disclose the news, can help the sender.  The predictions are tested by examining when economics faculty at different institutions use titles such as "Dr" and "Professor" in voicemail greetings and course syllabi.

Here is the paperHarbaugh’s home page has many interesting papers, most of all "Too Cool for School," which concerns the underexplored topic of "countersignaling."  He also has a paper on why the favorites save up their effort for the final round, and why status can make you risk-averse in gains but risk-loving in losses.  He is an underappreciated economist, and I thank Robin Hanson for the pointer to his work.

The bottom line: When it comes to titles, if the book lists "Ph.d." after the author’s name, run the other way.  Gregory Stock’s The Book of Questions is one notable exception to this rule.

Matt February 17, 2006 at 10:52 am

I really appreciate this work, because it strikes close to a paradox in my own life. I have a strong tendency to address professors with whom I communicate as “Dr.” or “Professor”, but at the same time I find those who, unasked, announce that they insist upon the title more than a little obnoxious. I use the title as a matter of respect and deference– a Ph.D is no small acheivement– but when one insists before one’s class or other audience that he be referred to as “Doctor”, I always want to ask, “So, if you were on an airplane, and the flight attendant came on the loudspeaker and asked, ‘If anyone on board this flight is a doctor, could you please step forward’, would you stand up and declare, ‘I have a doctorate in economics’?”

Nathan Whitehead February 17, 2006 at 5:31 pm

In the paper they mention posting students’ grades as an example of mandatory disclosure that could have positive effects. The forced disclosure provides more incentive to study hard; without the forced disclosure, students who brag about good grades could be signaling their low status.

This reminds me of Starship Troopers, the movie. Early in the movie the students check out each other’s public grades. Maybe the director was thinking about future incentive schemes?

Robert Speirs February 21, 2006 at 9:12 am

The Germans insist almost maniacally on titles, especially Doktor and Professor. JJ Luna tells about one German professor who had two doctorates in different fields and insisted that everyone call him Herr Doktor Doktor Professor! What does this tell us about Germany?

What language is Nets speaking?

biff April 23, 2006 at 8:33 am

@ Robert Speirs:

JJ Luna tells about one German professor who had two doctorates in different fields and insisted that everyone call him Herr Doktor Doktor Professor!

Actually, the professor would almost have certainly insisted on being called Herr Professor Doctor Doctor rather than Doctor Doctor Professor, as the Professor title is considered to be more prestigious than either Doctorate.

Shalom Beck July 20, 2006 at 6:03 am

Dummkopf, it’s Frau Professor Doktor Doktor Professor Doktor Doktor :>)

I did know a pediatrician (now deceased, alas), whose Austrian boss called her Frau Professor Doktor Doktor. But she wasn’t a Professor, and her husband had only one doctroate.

Naomi November 13, 2006 at 8:54 am
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