What You Don't Know May Hurt You: A Revealed Preferences Approach

34 Pages Posted: 9 Nov 2023 Last revised: 7 Dec 2023

See all articles by Gonzalo Arrieta

Gonzalo Arrieta

Stanford University

Lukas Bolte

Carnegie Mellon University

Date Written: October 26, 2023


The dominant approach to welfare is based on revealed preferences and thus is restricted to settings where the individual knows their preferences have been fulfilled. We use a choosing-for-others framework to experimentally study welfare when what the individual believes to be true differs from what is actually true. We find substantial heterogeneity. About 40% of participants see welfare as independent of beliefs; 10% see welfare impact only via beliefs; and 50% exhibit mixed behavior. Our results suggest most people support the idea that welfare goes beyond awareness, which may inform media regulation, informational policies, and government communication.

Keywords: Welfare, paternalism, revealed preferences, utilitarianism, mental states, beliefs, information policy, experience machine

JEL Classification: C91, D01, D60, I31, I38

Suggested Citation

Arrieta, Gonzalo and Bolte, Lukas, What You Don't Know May Hurt You: A Revealed Preferences Approach (October 26, 2023). Available at SSRN: https://ssrn.com/abstract=4614217 or http://dx.doi.org/10.2139/ssrn.4614217

Gonzalo Arrieta

Stanford University ( email )

Stanford, CA 94305
United States

Lukas Bolte (Contact Author)

Carnegie Mellon University ( email )

Pittsburgh, PA 15213-3890
United States

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