Voluntary Disclosure, Selective Memory

Voluntary disclosure fails because C is outside the game

The paper models disclosure as a bilateral game G between firm A and regulator, market, investor, or customer B. System welfare C is excluded from their payoff space, so both sides can gain while the underlying system degrades.

• A and B optimize over private payoffs, not airspace safety, climate stability, market fairness, or rule of law.
• The Hollow Win is (0,1,1): C loses while A and B win.
• The defect is game architecture, not lack of conventional disclosure.

MCAS was disclosed, but the decision logic was not

The paper opens with Ethiopian Airlines Flight 302, which crashed six minutes after takeoff on March 10, 2019, killing all 157 passengers and crew. Boeing disclosed MCAS in FAA technical materials, but stakeholders could not reconstruct the system-critical decisions behind it.

• The missing process record covered the removal of a second angle-of-attack sensor from the standard configuration.
• It also covered the change in MCAS authority from 0.6 degrees to 2.5 degrees without corresponding pilot training requirements.
• MCAS was omitted from the flight crew operations manual.

The paper’s target is reconstruction, not more disclosure

The MCAS case shows the paper’s central distinction: outcome disclosure can reveal what happened, while process disclosure records why a decision was made, what alternatives were considered, and who authorized the trade-off.

• External stakeholders had MCAS outcome information but lacked decision-level reasoning.
• The Reconstruction Gap is the distance between required process information and observed process information.
• Decision Accounting targets that gap by requiring contemporaneous records.

A1 removes system welfare from both utility functions

Axiom A1, Bilateral Payoff Exclusivity, defines voluntary disclosure game G as restricted to private payoffs πA and πB. System welfare W, also represented as C, is not an argument of either utility function.

• UA = fA(πA, πB) and UB = fB(πA, πB).
• ∂UA/∂W = ∂UB/∂W = 0.
• Because C is absent, the system has no standing inside the bilateral exchange.

A2 and A3 make outcome-only disclosure the equilibrium

Axiom A2 says outcome disclosure costs less than process disclosure. Axiom A3 then defines the Selective Memory Equilibrium: the firm maximizes bilateral surplus while keeping the probability of revealing C=0 near zero.

• Outcome disclosure reports results such as emissions = X.
• Process disclosure reports reasoning, assumptions, alternatives, and trade-offs.
• s* maximizes E[πA(s)+πB(s)] subject to P(reveal C=0 C=0, s) ≤ ε.

More outcome data cannot create missing process records

The Disclosure Futility Theorem states that no increase in the volume, frequency, or granularity of outcome disclosure closes the Reconstruction Gap R. R decreases only with process disclosure dp, which voluntary regimes structurally undersupply.

• A4 states ∂R/∂Vo = 0, where Vo is outcome disclosure volume.
• The information set is partitioned into outcome information Io and process information Ip.
• Without mandated process records, observed process information is zero or near-zero performative disclosure.

Selective disclosure and outcome acceptance form a dominant strategy pair

The Hollow Win Dominance Theorem compares two firm choices and two market choices. The firm can disclose fully or selectively. B can demand full process disclosure or accept outcome disclosure.

• If A fully discloses C=0, the transaction may be blocked or penalized, reducing πA.
• If B demands process disclosure, it incurs verification and delay costs and may lose the transaction to competitors.
• Under voluntary rules, selective disclosure plus acceptance of outcome disclosure produces (0,1,1).

The regulator and firm can both prefer under-disclosure

The paper calls this structure conflictoring: formally adversarial parties retain aligned incentives to suppress C=0. The regulator wants throughput or a public-facing win; the firm wants revenue or market access.

• The regulator’s win is approval, enforcement statistics, or regulatory throughput.
• The firm’s win is revenue, liquidity, product access, or market access.
• Revealing system degradation reduces both private payoffs in the voluntary game.

β_W measures welfare destruction per dollar of revenue

The paper defines β_W = −dW/dΠ, where Π is industry revenue, not profit. High-β_W sectors with values above 5.0 are treated as structurally intractable under disclosure-only intervention.

• For all commercial aviation, the paper estimates 900 billion in annual revenue and 2.1 trillion in MAX-related systemic welfare loss over five years.
• That aggregate aviation estimate gives β_W ≈ 0.47, below the corpus threshold of 1.0 for welfare-positive regimes.
• For the 737 MAX voluntary disclosure subgame, using $30 billion in MAX program revenue gives β_W = 70.

The aggregate aviation number hides the MCAS subgame

The paper separates the whole aviation industry from the specific voluntary disclosure game that governed MCAS documentation. The aggregate sector looks less intractable, while the MCAS subgame gives the extreme signal.

• The two MAX crashes produced $20 billion in direct losses.
• The paper also counts $1.4 trillion in Boeing market capitalization destruction.
• The full systemic cost used for the MCAS subgame is $2.1 trillion.

Decision Accounting expands G from (A,B) to (A,B,C)

The proposed rule change R is mandatory Decision Accounting. It transforms the flawed game G into G1 by adding C as a required decision input, rather than leaving system welfare as an optional disclosure output.

• The operative device is a 17-field DA record.
• Field 17 is System Welfare Impact.
• In G1, airspace safety, financial stability, environmental health, and other C states become visible at the decision point.

The paper argues for process mandates, not disclosure volume

The final move is from omission-permissive disclosure to strict decision accountability. The paper’s answer is not more ESG scores, risk metrics, compliance reports, or simultaneous disclosure; it is mandatory creation of decision-level records before selective memory can erase C.

• Outcome disclosure reveals results after the fact.
• Process disclosure records reasoning while the decision is still auditable.
• The claimed target equilibrium is Win-Win-Win (1,1,1), where A, B, and C are all visible in the payoff structure.