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The
Curse of Knowledge in Economic Settings: An Experimental Analysis,
Camerer, Loewenstein, and Weber, 1989
"In economic analyses of asymmetric information, better-informed
agents are assumed capable of reproducing the judgments of less-informed
agents. The authors discuss a systematic violation of this assumption
that they call the "curse of knowledge." Better-informed
agents are unable to ignore private information even when it is
in their interest to do so; more information is not always
better". |
Coming
Clean and Playing Dirtier: The Shortcomings of Disclosure as a Solution
to Conflicts of Interest, Cain, Loewenstein, and Moore
The "curse of knowledge" (Camerer, Loewenstein,
& M. Weber, 1989; Keysar, Ginzel, & Bazerman, 1995) describes
the inability to disregard unhelpful information. In their
study, Loewenstein, Moore, and R. Weber (2003) gave participants
a puzzle to solve and asked them to predict how long it would take
others to solve the puzzle. Participants got paid more when they
accurately predicted how long others would take. Some participants
were given additional information: the solution to the puzzle. Those
with the solution predicted that others would solve the puzzles
significantly more quickly than they actually did, and therefore
earned less money than did predictors who were not told the solution.
Nevertheless, because people are unaware of the curse of
knowledge, they were willing to pay to acquire knowledge that harmed
them, and expected informed predictors to perform better
(Loewenstein, Moore, & R. Weber, 2003). Conflicts of interest
can lead experts to give biased advice. Although disclosure of advisors'
conflict of interest has been a popular response to this problem,
we present evidence suggesting that disclosure cannot be assumed
to protect the audience from biased advice. Disclosure fails both
(1) because while it may encourage the audience to discount the
advice, such discounting tends to be insufficient, and (2) because
disclosure leads advisors to give even more biased advice than they
do otherwise. The end result is that the audience is not likely
to be left better off for knowing about the advisor's conflict of
interest. Successful responses to conflicts of interest will require
more robust interventions than merely disclosing them". |
From
Homo Economicus to Homo Sapiens, Thaler, 2000
"Once we know something, we can’t imagine ever thinking
otherwise. This makes it hard for us to realize that what we know
may be less than obvious to others who are less informed. The curse
of knowledge will lead me to think that others will have read the
same articles I have, and have learned the same lessons from them
(lessons I now take for granted), when in fact others have been
busy reading entirely different material, and have never even heard
of the findings that have so influenced my thinking". |
Paying
$1 to lose $2: Misperceptions of the value of information in predicting
the performance of others, Loewenstein, Moore, and Weber,
2003
"Traditional economic and decision-making models allow for
"free disposal" of information, meaning that more information
will never make a decision maker worse off. This implies that
those faced with making decisions should always place non-negative
value on information. Building on previous research on the "curse
of knowledge", we explore situations where this might not
be so. In two experiments, we document situations in which participants
place positive value on information, even when acquiring that
information hurts their performance and earnings. In the first
experiment, a significant number of participants pay for information
- the solution to a puzzle - that hurts their ability to predict
how many others will solve the puzzle. In the second experiment,
a majority of participants choose to "hire" informed
- rather than uninformed - agents, leading to lower earnings.
We discuss implications of our results for the role of information
and informed decision makers in economic situations".
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