Why Do People Give Less Weight to Advice the Further it is from Their Initial Opinion?

19 Pages Posted: 20 May 2010

See all articles by Francesco Ravazzolo

Francesco Ravazzolo

Free University of Bozen-Bolzano - Faculty of Economics and Management; BI Norwegian Business School

Øistein Røisland

Norges Bank - Department of Economics

Date Written: April 16, 2010

Abstract

Experimental studies on decision making based on advice received from others find that the weight put on the advice is negatively related to the distance between the advice and the decisionmaker's initial opinion. In this paper, we show that the distance effect can follow from rational signal extraction when the decisionmaker has imperfect knowledge about the advisor's competence. What drives the result is the assumption that the decisionmaker is better informed about her own competence than about the advisor's competence.

Keywords: Distance Effect, Policy Decision Making, Signal Extraction, Uncertainty

JEL Classification: C11, D78, D82, D83

Suggested Citation

Ravazzolo, Francesco and Røisland, Øistein, Why Do People Give Less Weight to Advice the Further it is from Their Initial Opinion? (April 16, 2010). Norges Bank Working Paper No. 2010/04. Available at SSRN: https://ssrn.com/abstract=1612297 or http://dx.doi.org/10.2139/ssrn.1612297

Francesco Ravazzolo (Contact Author)

Free University of Bozen-Bolzano - Faculty of Economics and Management ( email )

Via Sernesi 1
39100 Bozen-Bolzano (BZ), Bozen 39100
Italy

BI Norwegian Business School ( email )

Nydalsveien 37
Oslo, 0442
Norway

HOME PAGE: http://www.francescoravazzolo.com/

Øistein Røisland

Norges Bank - Department of Economics ( email )

P.O. Box 1179
Oslo, N-0107
Norway
+47 22 31 67 39 (Phone)
+47 22 31 60 50 (Fax)

Register to save articles to
your library

Register

Paper statistics

Downloads
40
Abstract Views
406
PlumX Metrics