Marcelo Denis Woo

We study whether the deliberate avoidance of information that is freely available and instrumentally useful is interdependent across people. Agents derive direct utility from anticipating their future, state-dependent consumption, potentially creating incentives to avoid information that induces such anticipation. Building on Bénabou (2013), our model predicts that when remaining ignorant imposes negative externalities on others’ prospects, individuals’ decisions to acquire or avoid information may exhibit strategic complementarities (making ignorance contagious), strategic substitutabilities (making it self-limiting), or be unconditional. We test these predictions in a novel experiment where participants choose whether to learn a payoff-relevant state and where remaining ignorant worsens a future payoff common to all group members. Consistent with contagious ignorance, exogenously increasing expectations about the prevalence of information avoidance raises participants’ own propensity to avoid information, on average. The contagion of ignorance appears mediated by a deterioration in anticipatory utility upon learning bad news —which become even worse news when ignorance is more prevalent. Individuals vary substantially in their best-responses to others’ informational choices: around 40% of subjects condition their informational choices on those of others, split evenly between strategic complements and strategic substitutes. The mixture of such strategy types affects equilibrium share of information avoiders monotonically and nonlinearly. Our findings suggest that optimal incentive schemes aiming to promote the aggregate take-up of information should account for interdependencies in informational decisions.

We examine patterns of discrimination when employers hold incorrect beliefs about the relationship between group membership and productivity, and suffer from confirmation bias when updating their beliefs. As a result, employers do not correct them fully, leading to persistent wage discrimination. Negative stereotypes generate discrimination against minority workers upon entry to the labor market, but are not enough to have discrimination in the long run, and reversals in discrimination are possible. We also discuss whether interventions aimed at reducing discrimination would succeed if confirmation bias is an important source of discrimination, and consider segregation in an extension with heterogeneous employers.