Regulators riding herd on Corporate America believe disclosure will do investors a world of good. But Carnegie Mellon University researchers say that's not necessarily the case.

Their experiment on how advisers and their clients respond when an adviser discloses a conflict of interest produced some surprising -- and thought-provoking -- results.

"Disclosure can have surprising backfire effects and it shouldn't be considered the panacea it once was," says Daylian Cain, a doctoral candidate at CMU's Tepper School of Business. "The main conclusion in our study is that disclosure left those receiving advice worse off for having been warned."

Cain's partners were George Loewenstein, an economics and psychology professor, and Don Moore, an assistant professor whose specialty is organizational behavior and theory. Their experiment involved a group of about 150 undergraduate students and jars of coins.

The students were divided into "advisers" and "estimators," with the advisers being split into three groups. Advisers were told the jars contained between $10 and $30 and were given the opportunity to examine the jars to make their own estimate and advise their clients, the estimators. Estimators were only allowed to look at the jar from a distance for 10 seconds.

Estimators were rewarded based on how close they came to the actual value of coins in a jar. The first group of advisers was rewarded based on how close their clients came to the actual value.

The other two groups were rewarded differently. In both cases, the more their clients overestimated the amount of money in the jar, the higher the reward to the advisers.

But one of the advisory groups with the conflict of interest didn't disclose it to their clients, while the other advisory group had to tell their clients they had a financial interest in getting them to overestimate the value of a jar.

Now, here's the rub: estimators counseled by advisers who disclosed the conflict performed the worst when it came to estimating how much money was in a jar. Even though they had discounted their advisers' advice, the estimators didn't discount it enough to do better than the other estimators who weren't told their adviser had a conflict.

Cain said the study suggests that disclosure can give those with conflicts of interest an incentive to further skew information. "Once an adviser has disclosed his potential conflict, he may feel that it is fair game to offer biased advice since he has made his motives known,'' Cain said, adding that an adviser may also feel "an incentive to try even harder to manipulate his client who will be less likely to take the advice at face value.''

The point of the study, to be published in the Journal of Legal Studies, is not that disclosure is always bad, Cain said. While there are many instances where it is valuable, there are instances where it can make things worse, the CMU researchers concluded. They say the trick is to identify when disclosure works and when it doesn't and regulate accordingly.

The throng of fiscal finaglers known as the U.S. Congress and the Bush administration are making faint noises about simplifying the federal tax code. Their initiative would be commendable were it not for the fact that the tortured complexity of tax laws is a direct result of their tireless tinkering with them every time a special interest group darkens their doorstep or an election approaches.

Their latest mind-numbing modification comes courtesy of the American Jobs Creation Act. Signed into law in October, the 800-page compendium merits a prominent place in the pantheon of pork barrel politics. While its most notable features are provisions promoting U.S. manufacturing, the grab bag of goodies also contains something for utilities, TV and film producers, sports franchises, motorsport race track owners and operators of marginal oil and natural gas wells.

There were even some crumbs for individual taxpayers, but probably not many in Pennsylvania. Here's why.

The new law allows individuals who itemize deductions on their federal tax returns to deduct either the state and local income taxes they pay or the state and local sales taxes they pay, whichever is higher. Previously, only state and local income taxes could be deducted.

Sales tax deductions can be based on your actual expenses, but since the provision didn't become law until a few weeks before the November election, you probably didn't save your tax receipts. So you'll have to rely on the state-by-state tables recently released by the Internal Revenue Service.

The tables prescribe how much sales tax you can deduct based on your income and the number of dependants you claim. A worksheet lets you add in local sales taxes such as the 1 percent Allegheny County residents pay as well as sales taxes you paid if you purchased a motor vehicle.

Unfortunately, the only Pennsylvanians who might benefit from the provision are probably those living off of tax-exempt bonds who purchase one or more cars. That's the judgment of Tim Adams, a tax expert at Downtown accounting firm Schneider Downs and James Holtzman of Legend Financial Advisors in the North Hills. "It's a tough combination to make things work," Holtzman says.

The biggest beneficiaries are residents of the seven states who don't impose state income taxes: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. The new law gives a deduction on their federal tax returns they didn't have before. Washington is the only one of those states that voted for Democratic presidential candidate John Kerry.