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Applied and bridge studies study record
Networks, information & disclosureWhy Mandatory Disclosure Cannot Correct Structural Harm Markets: A Theorem of Payoff-Invariant Regulation
STATUS · Manuscript in progressSSRN · Not yet posted
MECHANISM
Identify the incentive structure and the condition that would falsify the claim.
RULE CHANGE
Read the intervention only after the paper shows how the current payoff space fails to support system welfare.
READER USE
Use the summary to see where private gain creates system exposure, then check the study record.
Contribution — what this adds to the conversation
The contribution is a formal theorem with proof, corollaries, falsification conditions, and boundary conditions. It is a theoretical contribution that also engages with empirical evidence across six domains. The paper is positioned as a companion to the Missing System Theory and advances the canon's core argument.
WHAT'S NEW · The theorem is highly original: it formalizes a structural failure of disclosure that has been observed empirically but not proven. The four axioms, the proof structure, and the falsification conditions are novel contributions. The connection to the Missing System Theory and the 8-outcome taxonomy is also original.
The Disclosure Futility Theorem proves that mandatory disclosure of harm cannot convert a welfare-destroying transaction into a welfare-improving one when system welfare is not a function of the parties' payoffs, by the structure of the game. The theorem is proved under four axioms and supported by empirical evidence from six domains spanning five decades. The policy implication is that regulatory capital must shift from information provision to game transformation.