When Less is More: Experimental Evidence on Information Delivery During India's Demonetization
100 Pages Posted: 21 May 2018 Last revised: 3 Jan 2022
Date Written: May 10, 2019
How should information be disseminated to large populations? The options include broadcasting (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 when incentives to seek information are endogenous, this is not necessarily true. In a field experiment during the 2016 Indian demonetization, we varied how information about the policy was delivered to villages along three dimensions: how many people were initially informed (i.e., broadcasting versus seeding); whether the identities of the initially informed were made common knowledge; and number of facts delivered (2 versus 24). The quality of information aggregation is measured in three ways: the volume of conversations about demonetization, the level of knowledge about demonetization rules, and the likelihood of making the correct choice in a strongly incentivized decision where understanding the rules is key. Under common knowledge, seeding dominates broadcasting. Moreover, common knowledge makes seeding more effective but broadcast less so. These comparisons hold for all three outcomes and underscore the importance of the incentive to engage in social learning. Using data on differential behavior across different ability categories, we interpret our results via a model of image concerns, and also consider several alternative explanations.
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