Cat-and-Mouse in the Gallery: Mandatory AI Disclosure, Detection, and Opportunistic Behavior on an Online Art Platform

Generative AI intensifies information asymmetry on creative platforms, where audiences prefer human-made artworks but cannot reliably verify origin. We examine how mandatory AI disclosure and metadata-based automated detection shape creators’ opportunistic behavior and audience responses. Leveraging two sequential policy shocks on a digital art platform and employing RDiT, we find that mandatory disclosure initially deters label evasion. However, once metadata-based detection and auto-labeling are introduced, evasion rebounds as creators strategically adapt to these predictable detection rules. Simultaneously, audiences update beliefs: unlabeled works receive greater engagement and sales, suggesting that automated labeling increases the signaling value of non-labels. Our findings reveal a governance paradox in AI-mediated markets: stronger technological enforcement can weaken deterrence by reducing ambiguity and reconfiguring market signals. The study contributes to research on platform governance, deterrence, and disclosure by highlighting socio-technical feedback loops in AI transparency regimes.