Sunday, Jan. 6, 2019 8:00 AM - 10:00 AM
- Chair: Claudia Sahm, Federal Reserve Board
Persuasion with Motivated Beliefs
AbstractConsiderable empirical research finds that people derive utility not only from consumption, but also from their beliefs about themselves and the world. Rather than dispassionately updating their views in response to new information, such belief-based utility implies that people at times avoid information and use other strategies to protect their existing beliefs. We present a two-stage model of persuasion in the presence of belief-protecting strategies and test it in an incentive-compatible task. In the experiment, persuaders seek to shift receivers' subjective numeric estimates related to emotionally charged topics, such as abortion and racial discrimination. We manipulate whether the persuader first acknowledges her own lack of certainty and whether she first has an opportunity to build rapport with the receiver. Though these elements of communication ought to be irrelevant or even backfire under the standard account, our theory predicts they will enhance persuasiveness. We find that acknowledging doubt leads to a greater change in the receivers' beliefs, but find no effect for building rapport. Moreover, we find that persuaders end up changing their own estimates after writing a persuasive message. Those who presented a strong argument (as judged by third party raters) end up revising their own estimate in the direction of their argument, while those who provided a weak argument update in the opposite direction.
Measuring Information Preferences
AbstractAdvances in medical testing and widespread access to the internet have made it easier than ever to obtain information. Yet, when it comes to some of the most important decisions in life, people often choose to remain ignorant, because they fear what they may learn. We design and validate an information preference scale to measure an individual's desire to obtain or avoid information that may be unpleasant, but could improve their future decisions. The scale measures information preferences in three domains that are psychologically and materially consequential: health, consumer finance, and personal characteristics. We present tests of the scale's reliability and validity and show that the scale predicts real decisions to obtain (or avoid) information in each of the domains, as well as decisions from unrelated domains. We find that across settings, many respondents prefer to remain in a state of active ignorance even when information is freely available, and that information preferences are a stable trait but that an individual's preference for information can differ across domains. We also find that an individual’s preferences for information may affect others: in a medical decision-making context, when caregivers of cancer patients score high on avoidance, the patient they care for are less likely to have an Advance Directive.
Cognitive Goods, Normal Goods and the Market for Information
AbstractCognitive goods include mental states, beliefs, self-image, imagined fictional events, the absence of information and other states that are internal to an economic agent and can only be observed by the person holding them. It might appear that these goods can be created and destroyed at will by the agent at zero cost; yet evidence indicates that people still place value on them, and are willing to pay to change or maintain their cognitive state. This paper presents a set of conditions that are sufficient to explain this apparent paradox.
The conditions include:
- the existence of internal states which change over time and in response to external stimuli;
- definition of a weak preference relation over pairs of internal states;
- a stochastic correspondence between internal states and states of the external world;
- the assumption that the utility an agent derives from consuming normal goods can depend on their internal state.
Some consequences of those conditions are derived. These help to explain key phenomena about the operation of markets for information goods and culture, while showing how the existence of cognitive goods affects people’s valuations of normal goods including money. Policy-relevant conclusions can be drawn about marketing and disclosure regulations for financial and consumer goods, and the communication of monetary and fiscal policy.
- D8 - Information, Knowledge, and Uncertainty
- D9 - Micro-Based Behavioral Economics