Breakdown of Will and the Value of Information

45 Pages Posted: 15 Jan 2002

See all articles by Astrid Selder

Astrid Selder

Kempten University of Applied Sciences

Achim Wambach

ZEW – Leibniz Centre for European Economic Research; University of Mannheim; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Date Written: December 2001

Abstract

It is commonly observed that people refuse to obtain more detailed information about their health status, e.g. by not taking genetic tests, even if this information is costless and only disclosed to the individual. This observation is in contrast to the predictions of expected utility theory. We present a model that accounts for this phenomenon by using time-inconsistent preferences. It is shown that if people devise strategies against their inconsistency, which in line with the literature will be called will, then information about a serious illness might lead to a breakdown of will. In those cases information might have a negative value. We derive some comparative statistics results and provide empirical evidence.

Keywords: Genetic testing, time inconsistent preferences, hyperbolic discounting, breakdown of will

JEL Classification: D80, I10

Suggested Citation

Selder, Astrid and Wambach, Achim, Breakdown of Will and the Value of Information (December 2001). CEPR Discussion Paper No. 3111. Available at SSRN: https://ssrn.com/abstract=296868

Astrid Selder (Contact Author)

Kempten University of Applied Sciences ( email )

Bahnhofstraße 61
87435 Kempten
Germany

Achim Wambach

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

University of Mannheim ( email )

Universitaetsbibliothek Mannheim
Zeitschriftenabteilung
Mannheim, 68131
Germany

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

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