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More effort with less pay: On information avoidance, belief design and performance

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  • Huck, Steffen
  • Szech, Nora
  • Wenner, Lukas M.
Abstract
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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Suggested Citation

  • Huck, Steffen & Szech, Nora & Wenner, Lukas M., 2015. "More effort with less pay: On information avoidance, belief design and performance," Discussion Papers, Research Unit: Economics of Change SP II 2015-304, WZB Berlin Social Science Center.
    • Handle: RePEc:zbw:wzbeoc:spii2015304
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    1. Huck, Steffen & Szech, Nora & Wenner, Lukas M., 2015. "More effort with less pay: On information avoidance, belief design and performance," Discussion Papers, Research Unit: Economics of Change SP II 2015-304, WZB Berlin Social Science Center.
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    Cited by:

    1. Ambroise Descamps & Changxia Ke & Lionel Page, 2022. "How success breeds success," Quantitative Economics, Econometric Society, vol. 13(1), pages 355-385, January.
    2. Liu, Jia & Sonntag, Axel & Zizzo, Daniel John, 2022. "Information defaults in repeated public good provision," Journal of Economic Behavior & Organization, Elsevier, vol. 197(C), pages 356-369.
    3. Huck, Steffen & Szech, Nora & Wenner, Lukas M., 2015. "More effort with less pay: On information avoidance, belief design and performance," Discussion Papers, Research Unit: Economics of Change SP II 2015-304, WZB Berlin Social Science Center.
    4. Nikolaus Schweizer & Nora Szech, 2018. "Optimal Revelation of Life-Changing Information," Management Science, INFORMS, vol. 64(11), pages 5250-5262, November.
    5. Ro’i Zultan & Aniol Llorente-Saguer & Santiago Oliveros, 2024. "Beyond Value: on the Role of Symmetryin Demand for Information," Working Papers 2411, Ben-Gurion University of the Negev, Department of Economics.
    6. Ambroise Descamps & Changxia Ke & Lionel Page, 2022. "How success breeds success," Quantitative Economics, Econometric Society, vol. 13(1), pages 355-385, January.

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    More about this item

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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