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44 Cardozo Arts & Ent. L.J. 1 (2026)

handle is hein.journals/caelj44 and id is 1 raw text is: THE SHIFTING ECONOMICS OF INFLUENCER SPONSORSHIP DISCLOSURES* URI Y. HACOHEN* ABSTRACT Conventional wisdom holds that disclosing influencer sponsorship diminishes advertising's effectiveness by triggering consumer skepticism. Responding to this perceived transparency gap, regulators have adopted mandatory disclosure regimes to address a perceived market failure: the divergence between private commercial incentives and the public interest in transparency. This Article challenges that assumption. Drawing on a large-scale social media experiment (N=600), it demonstrates that disclosures not only increase consumers' recognition of advertising but also improve their attitudes toward both influencers and brands, while significantly boosting their willingness to share promotional content. These empirical results are further supported by a comprehensive synthesis of the emerging theoretical and empirical literature. The findings reveal a fundamental shift in the economics of influencer marketing: from reputational costs to reputational gains. As disclosures evolve from markers of deception to signals of legitimacy and prestige, the rationale for current regulatory approaches must be recalibrated. This Article contends that policymakers should pivot away from disclosure enforcement and instead focus on imposing substantive liability for false or misleading endorsements. * Permission is hereby granted for noncommercial reproduction of this Article in whole or in part for education or research purposes, including the making of multiple copies for classroom use, subject only to the condition that the name of the author, a complete citation, and this copyright notice and grant of permission be included in all copies. * Assistant Professor, Tel-Aviv University Faculty of Law; Faculty Associate at the Chief Justice Meir Shamgar Center for Digital Law and Innovation. I am grateful to Professor Peter Menell for his kind advice and support, to Guy Becker and Or Lipschits for their diligent research assistance and insightful feedback. I also wish to thank Professor Omer Peled, Professor Ronen Avraham, and the participants of the 2024 Israeli Law and Economics Association (ILEA) Annual Conference at the Hebrew University of Jerusalem for their valuable comments and engagement. The research for this article was supported by the Israel Science Foundation (ISF). I