Ignorance is Bliss? Domain Dependence of Preferences for the Timing of Information

Abstract

Is there a fundamental gain-loss asymmetry in information preferences? Using two-stage lotteries with varying dates of resolution and a fixed future date of payment, we ask subjects when they want to know the outcome: earlier, gradually, or later. When facing gains, information seeking predominates, becoming stronger at higher likelihoods. However, in the domain of losses, we find indifference between gradual and late resolution. Moreover, higher the probability of losing, weaker is the demand for information. Remarkably, a sizable minority are willing to pay for ignorance of bad news, a novel and explicit demonstration of information avoidance that is referred to as the ostrich effect. Our findings are inconsistent with established models in economics that cannot accommodate domain dependence of information preferences. They also reveal the importance of emotions in driving attitudes towards information.

Keywords: Non-instrumental information preferences, intrinsic value of information, resolution of uncertainty, information avoidance, ostrich effect

JEL Classification: D81, D83, D91