Thursday, December 27, 2018

On consumer finance, personal characteristics, & health, many prefer to remain in a state of active ignorance even when information is freely available

Ho, Emily and Hagmann, David and Loewenstein, George F., Measuring Information Preferences (September 14, 2018).

Abstract: Advances in medical testing and widespread access to the internet have made it easier than ever to obtain information. Yet, when it comes to some of the most important decisions in life, people often choose to remain ignorant for a variety of psychological and economical reasons. We design and validate an information preference scale to measure an individual’s desire to obtain or avoid information that may be unpleasant, but could improve their future decisions. The scale measures information preferences in three domains that are psychologically and materially consequential: consumer finance, personal characteristics, and health. We present tests of the scale’s reliability and validity and show that the scale predicts a real decision to obtain (or avoid) information in each of the three domains, as well as in the domain of politics, which is not explicitly measured in the scale. We find that across settings, many respondents prefer to remain in a state of active ignorance even when information is freely available, and that information preferences are a stable trait but can differ across domains. (Under R&R at Management Science)

Keywords: Information Avoidance, Scale Development, Information Preference, Health, Consumer Finance
JEL Classification: D83, D91, C90, I12

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