Paying $1 to Lose $2: Misperceptions of the Value of Information in Predicting the Performance of Others.
Year: 2003
Type: conference-abstract
Abstract: Traditional economic and decision-making models allow for "free disposal" of information, meaning that more information will never make a decision maker worse off.This implies that those faced with making decisions should always place non-negative value on information.Building on previous research on the "curse of knowledge," we explore situations where this might not be so.In two experiments, we document situations in which participants place positive value on information, even when acquiring that information hurts their performance and earnings.In the first experiment, a significant number of participants pay for information -the solution to a puzzle -that hurts their ability to predict how many others will solve the puzzle.In the second experiment, a majority of participants choose to "hire" informed -rather than uninformed -agents, leading to lower earnings.We discuss implications of our results for the role of information and informed decision makers in economic situations.
Institution: Carnegie Mellon University
Language: English
Subfield: General Decision Sciences
Field: Decision Sciences
Domain: Social Sciences
Open Access status: bronze
OpenAlex ID: W2166045674