Recent behavioral models argue in favor of avoidance of instrumental information. We explore the role of information avoidance in a real-eﬀort setting. Our experiment oﬀers three main results. First, we conﬁrm that preferences for avoidance of instrumental information exist, studying information structures on performance pay. Second, information avoiders outperform information receivers. This result holds independently of eﬀects of self-selection. Third, the ﬁndings support theories on information avoidance that favor an optimistic belief design, such as Brunnermeier and Parker (2005), instead of a Bayesian rational approach such as B´enabou and Tirole (2002). Subjects do not stick to their Bayesian expectations, but bias them optimistically under coarse information.
More Eﬀort with Less Pay: On Information Avoidance, Optimistic Beliefs, and Performance
Steffen Huck, Nora Szech and Lukas Wenner
|Date:||August 17, 2017|