Disclosure and transparency are often seen as universally desirable, and proposed as a part of solutions for a variety of social problems. “Rational” limitations on disclosure on grounds of proprietary costs are recognized (Verrecchia 2001), and there are merits of various levels of aggregation/disaggregation analyzed. Psychology literature points to contexts, e.g., those involving conflicts of interest, in which disclosure can create a “moral licensing” effect, which exacerbates bias instead of attenuating it (Cain et al. 2005; Miller 2007).
The moral licensing literature (Monin and Miller 2001; Miller and Effron 2010) suggests that when people behave well, or intend to act in a way that increases their sense of their own ethicality (such as providing a conflict of interest disclosure), they feel “licensed” to act in a self-serving (or unethical) manner. This moral licensing effect creates counterfactual behavior whereby restaurants who add healthy...
