Information Avoidance from Exogenous vs Endogenous Sources: Theory and Experiment

Abstract

Using a dynamic theory of preference formation, we investigate how information avoidance depends on whether the source is exogenous or endogenous (i.e. identical or tailored to individuals). Our model suggests that when information is exogenous, open-minded people are less likely to avoid information and consequently become more informed. When information is endogenous, however, close-minded individuals are more difficult to persuade and thereby force the sender to reveal more information. Our experiment confirms the main theoretical predictions and suggests that the dynamic preference theory plays an important role in addressing information avoidance. In departure from the theory, we observe that people tend to avoid more information than predicted, especially when the information is tailored. Our structural model suggests that this is due to a distaste for changing one’s worldview when information is from an endogenous source. This provides some evidence to address why the widely adopted communication strategy with a tailored message may be less effective than the theory suggests. (JELCodes: C91, D82, D83, D91)

Keywords: information avoidance, Bayesian persuasion, Experiment