Voluntary disclosure in a bargaining setting: A research note

• We conduct an experiment with relevance to intra-firm allocations arising from bargaining.
• In each treatment offerors can make an offer that may or may not be the fairest possible offer.
• In the control treatment disclosures are always made regarding the fairness of the offer.
• In the manipulation disclosures are voluntary.
• Mandatory disclosure promotes significantly higher frequency of fair offers.

We conduct an experiment on voluntary disclosure within a simple bargaining setting wherein a proposer must choose one of two possible offers and a responder chooses whether to reject or accept that offer. In one treatment the proposer has the option to disclose whether a fairer (more equal) offer was available relative to the one chosen. Under standard economic theory, a responder will interpret no disclosure to mean the proposer's offer was the less fair alternative, and so a proposer who is making the fairer offer will disclose. In consequence, voluntary disclosure should perform as well as mandatory disclosure in motivating proposers to make fair offers. Given their rejection rates, we find responders properly infer the meaning of non-disclosure. However, despite the correct inferences made by responders, proposers submit twice as many fair offers with mandatory disclosure than with voluntary disclosure. Our results suggest that the choice of voluntary versus mandatory disclosure has consequences for resource allocation within the firm even though under standard assumptions about preferences it should not.