Knowledge and Freedom

Abstract

We study the relationship between information and paternalism. When is autonomy granted to an individual that is less or better informed, and if no autonomy is granted, what form will intervention take? We introduce the Estimation Game, a novel experimental design that varies the amount of ambiguity inherent in a binary lottery. Our analysis is concerned with the behavior of policymakers (“Choice Architects”). Based on the utilitarian standard, we introduce a simple majoritarian standard that relies on implementing full information choice counterfactuals. This standard is approximately utilitarian, can be falsified and is psychologically plausible. It is also a novel normative microfoundation of the median voter theorem in the case of two policies. We contrast Mill's early utilitarianism with his later classical liberalism and show that both are equivalent under full information and without externalities. We conduct experiments of the Estimation Game with a Choice Architect to examine the extent to which Chooser knowledge matters in terms of restrictions on the Chooser's freedom of choice. More information leads to fewer interventions on the extensive margin. However, which option is imposed is a matter of personal Choice Architect preference, not majoritarian consideration. We interpret these findings as a “moral license:” the act of helping a clueless individual induces Choice Architects to then impose their own tastes, even when adjusting for the false consensus bias that is prevalent in beliefs. We also provide a classification of experimental subjects. Only 5% of Choice Architects intervene irrespective of the Chooser's information structure.

Keywords: Paternalism, informed choice, autonomy, utilitarianism, median voter theorem, Blackwell's theorem

JEL Classification: C91, D01, D04, D81, D82, D83, I31