Fantasy and Dread: An Experimental Test of Attentional Anticipatory Utility

Ganguly, Ananda R.; Tasoff, Joshua

doi:10.2139/ssrn.2370983

Cited by 3 publications

(2 citation statements)

References 14 publications

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“…More specifically, investors are inattentive to their portfolios (Bonaparte and Cooper, 2009;Brunnermeier and Nagel, 2008;Gabaix and Laibson, 2002;Reis, 2006;Woodford, 2009) and may actively avoid looking at their financial portfolios when the stock market is down (Karlsson et al, 2009;Sicherman et al, 2015). Moreover, individuals at risk for health conditions often eschew medical tests (e.g., for serious genetic conditions or STDs) even when the information is costless and should, logically, help them to make better decisions (Ganguly and Tasoff, 2014;Sullivan et al, 2004;Lerman et al, 1996Lerman et al, , 1999Lyter et al, 1987;Oster et al, 2013;Thornton, 2008). Finally, managers often avoid hearing arguments that conflict with their preliminary decisions (see, e.g., Schulz-Hardt et al, 2000), even though such arguments could help them avoid implementing measures that are ill-founded.…”

Section: Literature Reviewmentioning

confidence: 99%

The Ostrich in Us: Selective Attention to Financial Accounts, Income, Spending, and Liquidity

Olafsson¹,

Pagel

2017

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This paper investigates attention to personal financial accounts using panel data from a financial management software provider containing information on daily logins, income, spending, balances, and credit limits. We first explore whether individuals pay attention in response to the arrival of income payments. Here, we utilize that weekends and holidays generate exogenous variation in regular payment arrival using a fixed-effects approach. We find that individuals are five times more likely to log in on days when they get paid. Beyond looking at the causal effect of income on attention, we examine how attention depends on spending and individual financial standing, such as cash holdings, savings, and liquidity. We find that attention is decreasing in individual spending but increasing in cash holdings and liquidity. These results are consistent with selective attention and Ostrich effects with respect to financial accounts. To rationalize our findings, we set up a model assuming individuals experience utility over news, or changes in expectations about consumption, as proposed by Kőszegi and Rabin (2009). Because agents dislike bad news more than they like good news, paying attention to financial account is considered unpleasant especially when remaining cash holdings are low.

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Section: Literature Reviewmentioning

confidence: 99%

The Ostrich in Us: Selective Attention to Financial Accounts, Income, Spending, and Liquidity

Olafsson¹,

Pagel

2017

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“…19 For example, willingness to pay for an assessment of one's IQ or beauty (relative to others) increases as one's subjective prior belief about this assessment becomes more favorable (Eil and Rao, 2011;Möbius et al, 2011;Burks et al, 2013). Conversely, willingness to pay to avoid testing for a herpes infection is greater for the more dreaded type 2 infection than for type 1 (Ganguly and Tasoff, 2014). That is, as we predict in Proposition 1 (Condition 3), the desire for information increases as the valence of anticipated outcomes increases.…”

Section: Conditions For Information Avoidancementioning

confidence: 99%

Curiosity, Information Gaps, and the Utility of Knowledge

et al. 2012

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More Effort with Less Pay: On Information Avoidance, Belief Design and Performance

2015

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In a tedious real effort task, subjects know that their piece rate is either low or ten times higher. When subjects are informed about their piece rate realization, they adapt their performance. One third of subjects nevertheless forego this instrumental information when given the choice -and perform stunningly well. Agents who are uninformed regarding their piece rate tend to outperform all others, even those who know that their piece rate is high. This also holds for enforced instead of self-selected information avoidance. All our findings can be captured by a model of optimally distorted expectations following Brunnermeier and Parker (2005).

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Fantasy and Dread: An Experimental Test of Attentional Anticipatory Utility

Cited by 3 publications

References 14 publications

The Ostrich in Us: Selective Attention to Financial Accounts, Income, Spending, and Liquidity

The Ostrich in Us: Selective Attention to Financial Accounts, Income, Spending, and Liquidity

Curiosity, Information Gaps, and the Utility of Knowledge

More Effort with Less Pay: On Information Avoidance, Belief Design and Performance

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