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The Better is the Enemy of the Good

Author

Listed:
  • Christine L. Exley

    (Harvard Business School)

  • Judd Kessler

    (University of Pennsylvania)

Abstract

In standard economic theory, information helps agents optimize. But providing agents with information about the benefits of an action often fails to encourage that action. This paper proposes a far-reaching behavioral explanation: information may make salient that the benefits of taking an action could be improved and agents may see the potential for improvement as a reason to avoid the action. In an experiment, making more salient how a donation could be improved significantly decreases giving. Self-serving motives dramatically magnify the effect, suggesting why information may be particularly ineffective at encouraging privately costly actions with social or future benefits.

Suggested Citation

  • Christine L. Exley & Judd Kessler, 2017. "The Better is the Enemy of the Good," Working Papers 2017-068, Human Capital and Economic Opportunity Working Group.
    • Handle: RePEc:hka:wpaper:2017-068
    Note: MIP
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    File URL: http://humcap.uchicago.edu/RePEc/hka/wpaper/Exley_Kessler_2017_BetterEnemyGood.pdf
    File Function: First version, August 27, 2017
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    References listed on IDEAS

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    Cited by:

    1. Christine L. Exley & Stephen J. Terry, 2019. "Wage Elasticities in Working and Volunteering: The Role of Reference Points in a Laboratory Study," Management Science, INFORMS, vol. 65(1), pages 413-425, January.

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    More about this item

    Keywords

    experiment; information acquisition; philanthropy;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers

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