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A Test of Information Aversion

Author

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  • Kops, Christopher
  • Pasichnichenko, Illia

Abstract

The standard Bayesian model implies that information can never have a negative value. We put this implication to the proof. Our paper provides the first test of the value (positive or negative) of information under uncertainty. We show that the “Bayesian implication” stands in conflict with the information-averse behavior that is revealed in our experiment. This behavior demonstrates that the value of truthful and unambiguous information may indeed be negative. Our findings complement predictions from recent theoretical work in showing that negative value of information correlates with ambiguity aversion. This highlights the importance of counseling for decision-making under uncertainty.

Suggested Citation

  • Kops, Christopher & Pasichnichenko, Illia, 2020. "A Test of Information Aversion," Working Papers 0682, University of Heidelberg, Department of Economics.
    • Handle: RePEc:awi:wpaper:0682
    Note: This paper is part of http://archiv.ub.uni-heidelberg.de/volltextserver/view/schriftenreihen/sr-3.html
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    References listed on IDEAS

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    1. Arthur Snow, 2010. "Ambiguity and the value of information," Journal of Risk and Uncertainty, Springer, vol. 40(2), pages 133-145, April.
    2. Jason Dana & Roberto Weber & Jason Kuang, 2007. "Exploiting moral wiggle room: experiments demonstrating an illusory preference for fairness," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 33(1), pages 67-80, October.
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    Cited by:

    1. Berger, Loïc, 2022. "What is partial ambiguity?," Economics and Philosophy, Cambridge University Press, vol. 38(2), pages 206-220, July.
    2. Kellner, Christian & Thordal-Le Quement, Mark & Riener, Gerhard, 2020. "Reacting to ambiguous messages: An experimental analysis," DICE Discussion Papers 357, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).

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    More about this item

    Keywords

    value of Information; ambiguity aversion; Ellsberg paradox; Ellsberg urn;
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