When Less is More: Experimental Evidence on Information Delivery During India's Demonetization
94 Pages Posted: 21 May 2018 Last revised: 22 Jul 2019
Date Written: May 10, 2019
How should information be disseminated to large populations? The options include broadcasts (e.g., via mass media) and informing a small number of "seeds" who then spread the message. While it may seem natural to try to reach the maximum number of people from the beginning, we show, theoretically and experimentally, that information frictions can reverse this result when incentives to seek are endogenous to the information policy. In a field experiment during the chaotic 2016 Indian demonetization, we varied how information about the policy was delivered to villages along two dimensions: how many people were initially informed (i.e. broadcasting versus seeding) and whether the identities of the initially informed were publicly disclosed (common knowledge). The quality of information aggregation is measured in three ways: the volume of conversations about demonetization, the level of knowledge about demonetization rules, and choice quality in a strongly incentivized decision dependent on understanding the rules. Under common knowledge, broadcasting performs worse and seeding performs better (relative to no common knowledge). Moreover, with common knowledge, seeding is the more effective strategy of the two. These comparisons hold on all three outcomes.
Suggested Citation: Suggested Citation