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A test of information aversion

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The standard Bayesian model implies that information can never have a negative value. We put this implication to the proof. Our paper provides the first test of the value (positive or negative) of information under uncertainty. We show that the "Bayesian implication" stands in conflict wit...

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Bibliographic Details
Main Authors: Kops, Christopher (Author) , Pasichnichenko, Illia (Author)
Format: Book/Monograph Working Paper
Language:English
Published: Heidelberg University of Heidelberg, Department of Economics April 2020
Series:Discussion paper series / University of Heidelberg, Department of Economics no. 682
In: Discussion paper series (no. 682)

DOI:10.11588/heidok.00028244
Subjects:
Graue Literatur
Online Access:Verlag, kostenfrei: http://archiv.ub.uni-heidelberg.de/volltextserver/28244/7/Kops_2020_dp682.pdf
Resolving-System, kostenfrei: https://doi.org/10.11588/heidok.00028244
Resolving-System, kostenfrei: http://hdl.handle.net/10419/235005
Resolving-System, kostenfrei, Volltext: https://nbn-resolving.org/urn:nbn:de:bsz:16-heidok-282444
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Author Notes:Christopher Kops and Illia Pasichnichenko
Description
Summary:The standard Bayesian model implies that information can never have a negative value. We put this implication to the proof. Our paper provides the first test of the value (positive or negative) of information under uncertainty. We show that the "Bayesian implication" stands in conflict with the information-averse behavior that is revealed in our experiment. This behavior demonstrates that the value of truthful and unambiguous information may indeed be negative. Our findings complement predictions from recent theoretical work in showing that negative value of information correlates with ambiguity aversion. This highlights the importance of counseling for decision-making under uncertainty.
Item Description:JEL codes: D81, D83, D90, Keywords: Value of Information, Ambiguity Aversion, Ellsberg paradox, Ellsberg urn
Physical Description:Online Resource
DOI:10.11588/heidok.00028244

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