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Lost in Transmission

Author

Listed:
  • Thomas Graeber

    (Harvard Business School)

  • Shakked Noy

    (Massachusetts Institute of Technology)

  • Christopher Roth

    (. University of Cologne, ECONtribute, CEPR, briq and MPI for Collective Goods Bonn)

Abstract

For many decisions, people rely on information received from others by word of mouth. How does the process of verbal transmission distort economic information? In our experiments, participants listen to audio recordings containing economic forecasts and are paid to accurately transmit the information via voice messages. Other participants listen either to an original recording or a transmitted version and then state incentivized beliefs. Our main finding is that, across a variety of transmitter incentive schemes, information about the reliability of a forecast is lost in transmission more than twice as much as information about theforecast’s level. This differential information loss predictably distorts listeners’ belief updates: following transmission, reliable and unreliable messages converge in influence and average belief updates from new information are weakened. Mechanism experiments show that the differential loss is not driven by transmitters deliberately trading off the costs and benefits of transmitting different kinds of information. Instead, it results from memory constraints during transmission, which can be overcome through targeted reminders.

Suggested Citation

  • Thomas Graeber & Shakked Noy & Christopher Roth, 2024. "Lost in Transmission," ECONtribute Discussion Papers Series 272, University of Bonn and University of Cologne, Germany.
    • Handle: RePEc:ajk:ajkdps:272
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Information Transmission; Word-of-mouth; Narratives; Reliability;
    All these keywords.

    JEL classification:

    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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