Full disclosure

New Assistant Professor Michael Grubb offers a different take on corporate disclosure models

Professor Michael Grubb

Assistant Professor Michael Grubb knew he wanted to become an economist almost as soon as he opened his first microeconomics textbook during his freshman year at the University of Pennsylvania.

“It was fun and exciting and I got hooked on it,” says Grubb, who joined the MIT Sloan faculty this year after graduating from Stanford University with a PhD in economics.

The decision to come to MIT was “a tough one,” says Grubb, who had a few other options, but in the end, MIT seemed like the best fit. So far, that decision has been the right one. “It has been great,” he says.

For Grubb, who has worked with the World Bank, Oliver Wyman and Company, and Brand Equity Ventures, going into academia was the obvious direction for his personal growth. “I have the freedom to work on any problem I find interesting,” he says. Grubb's research interests include applied microeconomic theory, industrial organization, and behavioral economics.

No news is good news

Grubb's recent papers have been on optimal pricing to overconfident consumers, reputational concerns regarding disclosure, and tax-advantaged employee benefits.

Using the example of Tony Blair's reticence to discuss his son's vaccine record during the MMR scare in the UK, Grubb explored disclosable information in his recent work. At the time, there was a study possibly linking the MMR vaccination to autism in children. When asked whether he had chosen to vaccinate his young son, Blair chose not to respond. This did not reassure the British public. “Early disclosure models predict that the public will always assume the worst if information is withheld” Grubb says.

Using this example, Grubb studied the links between a situation like Blair's and similar situations that arise for people running companies. According to his paper, companies may be better off developing a “reputation for reticence” and so when they choose not to disclose information, there is a precedent that suggests the news could go either way. In other words, sometimes companies “may want to hide even good news,” Grubb says. “They may just want to make no disclosures.”

Making adjustments

Grubb hopes to further explore these theories at MIT Sloan. “I am looking forward to the collaborations,” says Grubb, who has spent most of his first months adjusting to his new life.

“Any time you teach a course for the first time, it is hard work to get up to speed,” Grubb says. “The students all have very diverse backgrounds and it is an interesting challenge to teach at a level that is good for everyone.”

Nevertheless, Grubb is confident that his new life at the Institute — and in Boston — will be a positive one. An avid runner and cyclist, he says he was particularly looking forward to the opportunity for outdoor sports — even in the snow. “The weather is certainly better here,” says Grubb, who grew up in Ithaca, New York. “I am looking forward to being here.”