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I Prefer Not to Know! Analyzing the Decision of Getting Information about your Ability

  • Paulina Granados Zambrano

The recognition that information is, most of the time, incomplete and imperfect is essential in understanding the nature of the formation of beliefs. To understand human behavior in the area of (academic) performance, the beliefs individuals sustain about their ability become crucial. Before performing a certain task, the agent never knows his/her true ability. He/she only has an ex-ante notion of his/her believed ability and the truth is only revealed ex-post. Once the true ability is known and the payoffs realized, we observe different reactions that range from disappointment to happiness. The logical question is then, who would have preferred not to know the truth? This paper deals with the information acquisition decisions of individuals who face uncertainty about their own ability. At a theoretical level (Bénabou and Tirole, 2002), it has been shown that overconfident individuals (people with beliefs about themselves higher than reality) with time inconsistent preferences have more at stake when they face the decision of learning the truth about themselves than more pessimistic agents. To test this prediction, a field experiment is designed and implemented, where students face the decision of learning, or not, their true ability before performing a test. It will be shown that overconfident students indeed more often decide not to learn their true ability.

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Paper provided by European University Institute in its series Economics Working Papers with number ECO2012/04.

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Date of creation: 2012
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Handle: RePEc:eui:euiwps:eco2012/04
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  1. Bénabou, Roland & Tirole, Jean, 2002. "Willpower and Personal Rules," CEPR Discussion Papers 3143, C.E.P.R. Discussion Papers.
  2. Jean Tirole & Roland Bénabou, 2006. "Incentives and Prosocial Behavior," American Economic Review, American Economic Association, vol. 96(5), pages 1652-1678, December.
  3. Roland Bénabou & Jean Tirole, 2003. "Intrinsic and Extrinsic Motivation," Review of Economic Studies, Oxford University Press, vol. 70(3), pages 489-520.
  4. Monica Paiella & Luigi Guiso, 2004. "The Role of Risk Aversion in Predicting Individual Behaviour," Econometric Society 2004 Latin American Meetings 222, Econometric Society.
  5. Roland Bénabou & Jean Tirole, 2006. "Belief in a Just World and Redistributive Politics," The Quarterly Journal of Economics, MIT Press, vol. 121(2), pages 699-746, May.
  6. repec:hal:journl:hal-00173700 is not listed on IDEAS
  7. Luigi Guiso & Tullio Jappelli, 2006. "Information Acquisition and Portfolio Performance," CeRP Working Papers 52, Center for Research on Pensions and Welfare Policies, Turin (Italy).
  8. Richard Deaves & Erik Lüders & Guo Ying Luo, 2005. "An Experimental Test of the Impact of Overconfidence and Gender on Trading Activity," CoFE Discussion Paper 05-07, Center of Finance and Econometrics, University of Konstanz.
  9. Bernard Caillaud & Jean Tirole, 2007. "Consensus Building: How to Persuade a Group," American Economic Review, American Economic Association, vol. 97(5), pages 1877-1900, December.
  10. repec:hal:journl:hal-00173678 is not listed on IDEAS
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