It’s tempting to reveal very little information when trying to make a sale. We all want to put our best foot forward, and to reveal imperfections only when we absolutely have to. For example, when selling a car, a seller might want to reveal the car’s age and mileage, but be reluctant to reveal other imperfections, such as dings in the paintwork.
However, a study on information disclosure shows that more disclosure, even of defects, can result in higher prices. The study randomly split 8,000 cars into two groups – one with standard information, including age and mileage, and a second group with additional detailed information on the car’s paintwork. The results showed that the group with more detailed information had a better chance of sale, and sold for higher prices. Most surprisingly, this effect was greatest for cars in poorer condition. The probability of a sale rose by 23%, with prices up by 5%. The additional information helped buyers better evaluate their purchase, leading to increased prices.
