Kops, Christopher ; Pasichnichenko, Illia
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Abstract
The standard Bayesian model implies that information can never have a negative value. We put this implication to the proof. Our paper provides the first test of the value (positive or negative) of information under uncertainty. We show that the “Bayesian implication” stands in conflict with the information-averse behavior that is revealed in our experiment. This behavior demonstrates that the value of truthful and unambiguous information may indeed be negative. Our findings complement predictions from recent theoretical work in showing that negative value of information correlates with ambiguity aversion. This highlights the importance of counseling for decision-making under uncertainty.
Document type: | Working paper |
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Series Name: | Discussion Paper Series / University of Heidelberg, Department of Economics |
Volume: | 0682 |
Place of Publication: | Heidelberg |
Date Deposited: | 17 Apr 2020 10:06 |
Date: | April 2020 |
Number of Pages: | 28 |
Faculties / Institutes: | The Faculty of Economics and Social Studies > Alfred-Weber-Institut for Economics |
DDC-classification: | 330 Economics |
Uncontrolled Keywords: | value of Information, ambiguity aversion, Ellsberg paradox, Ellsberg urn |
Series: | Discussion Paper Series / University of Heidelberg, Department of Economics |