Political Economy

More Effort with Less Pay: On Information Avoidance, Optimistic Beliefs, and Performance

  • Author:

    Steffen Huck, Nora Szech and Lukas Wenner

  • Date: July 2018
  • Neoclassical theory presumes that agents value instrumental information. In contrast, recent behavioral studies motivate and model information avoidance. We study preferences for and against instrumental information in a real-effort task varying information structures on performance pay. Our study offers three main results. First, we confirm that both, preferences for and against instrumental information, exist. Second, information avoiders outperform information receivers. This result holds independently of effects of self-selection. Third, our findings about information avoiders can be aligned with behavioral theories of optimistic belief design.