The Effects of Accountable Advice

In the US, consulting companies like McKinsey rarely face direct public accountability for their role in the firm behavior of their clients. This often allows firms to offload culpability onto their advisors. We use a simplified lab-experiment to investigate how such public accountability for advisors may change i)the type of advice consulting companies offer to firms and ii) the actions of firms. We find such accountable advice affects both the advice given by advisors and the action taken by firms. Work is ongoing regarding how accountable advice affects total welfare, but our results suggest that ultimately holding consulting companies accountable for the actions of their clients may improve consumer welfare.