Cain, Lowenstein, and Moore on Disclosing Conflicts

Daylian M. Cain , George Loewenstein and Don A. Moore (Yale School of Management , Carnegie Mellon University - Department of Social and Decision Sciences and Carnegie Mellon University - David A. Tepper School of Business) have posted The Dirt on Coming Clean: Perverse Effects of Disclosing Conflicts of Interest on SSRN.  Here is the abstract:

Conflicts of interest can lead experts to give biased and corrupt advice. Although disclosure is often proposed as a potential solution to these problems, we show that it can have perverse effects. First, people generally do not discount advice from biased advisors as much as they should, even when advisors' conflicts of interest are honestly disclosed. Second, disclosure can increase the bias in advice because it leads advisors to feel morally licensed and strategically encouraged to exaggerate their advice even further. This means that while disclosure may [insufficiently] warn an audience to discount an expert-opinion, disclosure might also lead the expert to alter the opinion offered and alter it in such a way as to overcompensate for any discounting that might occur. As a result, disclosure may fail to solve the problems created by conflicts of interest and it may sometimes even make matters worse.

Very interesting paper--I usually don't post older papers (this is from 2003), but I am curious whether there has been any confirmation or critique of this research.  Comments are open on this post.

Comments

[Daniel S. Goldberg]

Larry,

There is a healthy body of research in the COI literature, which has particular relevance for COIs involving physicians, investigators, and commercial sponsors of either research or drugs/devices, generally confirming these findings.

This is in part why the idea that disclosure of relevant COIs, while certainly ethically preferable, is most assuredly NOT a panacea for the problem. There's also quite a good discussion of some of the empirical research on this in Andrew Stark's fine book, Conflicts of Interest in American Public Life, and in Sheldon Krimsky's book, Science in the Private Interest.

In Krimsky's book, he adopts Stark's taxonomy of COI, which suggests there are three (psychological) stages regarding COIs. The problem with disclosure is that there is good evidence that by the time disclosure and/or penalties are applied, whatever changes on behavior we might seek to avoid have already occurred. The authors suggest the only effective practice we have found for countering the effects of COIs is by eliminating the relationships that give rise to the COIs, which is partly why federal laws and regulations are, in the letter, quite strict about what relationships federal officials may participate in with stakeholders.

There is a vehement and active debate on these matters, of course, but my understanding of the literature is that the findings reported by the authors above are generally correct, and more so, that such findings are not vigorously disputed (unlike virtually everything else about COIs in medicine and research).

[michael webster]

There has been at least one Court in the US that has accepted the reasoning in rejecting a batch settlements.

I wrote about it and the general problem for consumer disclosure law here:

http://www.bizop.ca/blog2/due-diligence/strategic-response-to-disclosure.html