Information Acquisition and Disclosure by Advisors with Hidden Motives

A sender acquires a signal about an object's quality and commits to a rule to disclose its realizations to a receiver, who then chooses to buy the object or to keep an outside option of privately known value. Optimal disclosure rules typically conceal negative signal realizations when the object's sale is very profitable to the sender and positive signal realizations when the sale is less profitable. Using such disclosure rules, the advisor is able to steer sales from lower- to higher-profitability objects. I show that, despite this strategic concealment of some signal realizations, the receiver may prefer being informed by a non-transparent sender, because the sender's hidden motives produce an additional incentive to invest in acquiring a precise signal of the object's quality. I use my model to evaluate policies commonly proposed in the context of financial advisors, such as mandatory disclosure of commissions and commission caps.