What You Don't Know May Hurt You: Preferences Over Mental And External States

39 Pages Posted: 9 Nov 2023 Last revised: 31 May 2024

See all articles by Gonzalo Arrieta

Gonzalo Arrieta

Stanford University

Lukas Bolte

Carnegie Mellon University

Date Written: October 26, 2023

Abstract

The dominant approach to welfare, revealed preference, 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 differs from what is actually true. 42% of participants see welfare as independent of beliefs; 22% see welfare as exclusively determined by beliefs; and 29% care about both beliefs and reality. Furthermore, the average participant values accurate beliefs. While there is large heterogeneity, our results suggest most people support the idea that welfare goes beyond beliefs, which can 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: Preferences Over Mental And External States (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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