Title: Heads in the Sand: Theory and Experiment on Information Avoidance in Groups
Abstract: Information avoidance —the deliberate refusal of freely available information— is well-documented in individual decision-making. People may steer clear of useful information that could allow them attain better outcomes, even when information was freely available. In many situations, however, individual outcomes are not independent, but are correlated with those of others. Examples include global warming, infectious diseases, or a company's success (or failure).
This paper explores information avoidance in a group context, where individual decisions impact the outcomes of the whole group. If more individuals choose to remain uninformed, the outcome in the bad state of the world becomes worse for everyone. In this context, it is possible that the deliberate avoidance of information becomes contagious. If people are more likely to avoid information when they foresee worse outcomes (i.e., when their peers are uninformed), the group may end up trapped in an equilibrium where nobody acquires information, with potentially dire consequences. We design and run a novel experiment that studies information avoidance in groups with externalities. In the aggregate, we find that information avoidance increases when people expect that avoidance is prevalent among their peers, in line with contagious ignorance. Data collected through the strategy method, however, reveals substantial heterogeneity at the individual level. About 20% of our subjects behave in accordance with contagious ignorance, while another 20% exhibit the opposite tendency: they become more likely to acquire information when others avoid it. Overall, the data suggest that in groups information avoidance can be contagious, and that this, however, can be circumscribed by appropriate group design.