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Ignorance is Bliss? Domain Dependence of Preferences for the Timing of Information

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  • Akella, Sarat Chandra

    (HEC Paris)

Abstract

Is there a fundamental gain-loss asymmetry in information preferences? Using two-stage lotteries with varying dates of resolution and a fixed future date of payment, we ask subjects when they want to know the outcome: earlier, gradually, or later. When facing gains, information seeking predominates, becoming stronger at higher likelihoods. However, in the domain of losses, we find indifference between gradual and late resolution. Moreover, higher the probability of losing, weaker is the demand for information. Remarkably, a sizable minority are willing to pay for ignorance of bad news, a novel and explicit demonstration of information avoidance that is referred to as the ostrich effect. Our findings are inconsistent with established models in economics that cannot accommodate domain dependence of information preferences. They also reveal the importance of emotions in driving attitudes towards information.

Suggested Citation

  • Akella, Sarat Chandra, 2024. "Ignorance is Bliss? Domain Dependence of Preferences for the Timing of Information," HEC Research Papers Series 1533, HEC Paris.
    • Handle: RePEc:ebg:heccah:1533
    DOI: 10.2139/ssrn.5011331
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    Keywords

    Non-instrumental information preferences; intrinsic value of information; resolution of uncertainty; information avoidance; ostrich effect;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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