OK, doc—just give it to me…skewed? More precise information doesn’t always mean more informed decisions
When offered the choice, people overwhelmingly prefer news sources that deliver imprecise bad news frequently and deliver precise good news infrequently—rather than sources that do the opposite, according to a study co-authored by a University of Michigan researcher.
The study finds people favor “positively skewed” information sources that deliver good news accurately and infrequently and bad news frequently but with lower fidelity compared to “negatively skewed” information sources that present good news frequently but with lower fidelity and bad news less frequently but accurately.
Crucially, among people who rejected obtaining information from highly accurate sources, almost all also rejected negatively skewed information sources, but a substantial proportion found positively skewed information sources to be palatable.
This finding suggests a foot-in-the-door strategy for informing otherwise information-resistant individuals.
“The most important insight from our paper is that more precise information does not always mean more informed decision-making,” said Yesim Orhun, associate professor of marketing at U-M’s Ross School of Business who studies belief formation and belief-based utility and their consequences for decision-making.
She co-authored the study, “Intrinsic Information Preferences and Skewness,” published in the American Economic Review.
“People manage their emotions about anxiety-provoking events in the future by choosing the beliefs they want to carry, which is partially managed by which information sources they want to expose themselves to,” Orhun said.
The study extends precursory research that documents information avoidance. Previous studies have shown that individuals avoid obtaining information in some contexts, even when information can be useful for making better decisions.
Information avoidance generally arises in anxiety-provoking situations, where the information can be good or bad. For example, consider deciding to take a precise medical test that will determine whether one will develop a debilitating disease later in life.
To protect themselves against the emotional blow of getting certain bad news, people may choose to remain in the dark instead. Orhun and her collaborators tested different kinds of information people might prefer in such situations.
The team conducted experiments on informational preferences in medical testing, intelligence testing and lotteries. First, they discovered a new kind of preference—a preference for positive skewness—among the majority of individuals. The researchers then focused on individuals who rejected obtaining precise information that perfectly predicted the outcome. They found some information-avoidant individuals will agree to receive positively skewed information.
Orhun said at the outset, she expected the majority of people to prefer negatively skewed information—as she does.
“I do not like to get my hopes up high only to get disappointed by reality later,” she said. “In fact, much of the early discussions about this project related to medical tests I was willing to endure as an expectant mom and my inability to fathom why my husband would not share the same informational preferences. The data settled the debate, which showed that I am in the minority.”
Orhun says the findings raise two fundamental questions for further research: First, would people pick different information sources if they had better coping mechanisms for dealing with the emotional impact of reality, such as more social support? Second, how should people think about the welfare implications of information?
“We care about one’s emotional well-being and physical and economic well-being,” she said. “Information generally leads to better decision-making. Should we force information onto people when they want to avoid it to protect their emotional well-being?
“I think this is where knowing that positively skewed information may increase information uptake really comes in handy.”
Orhun’s co-authors are Yusufcan Masatiloglu of the University of Maryland and Collin Raymond of Cornell University.
Original version of this story by JT Godfrey, Ross School of Business