Information Avoidance from Exogenous and Endogenous Sources : Theory and Experiment

Using a dynamic theory of preference formation in which people adopt worldviews, we investigate how information avoidance behavior depends on whether the source is exogenous or endogenous (i.e. identical or tailored to individuals). Our model suggests that when the information is exogenous, open-minded people acquire more exogenous information and consequently become more informed. When the information is endogenous, however, close-minded individuals are better informed because they are more difficult to persuade and thereby force the sender to reveal more information. Our experimental results confirm 1) open-minded people acquire more exogenous information; 2) senders reveal more endogenous information to close-minded individuals. Departure from theory, we observe that close-minded people avoid endogenous information more than predicted and thus are not better informed. Interestingly, we find that people are more likely to avoid endogenous information, even when the signals in the exogenous treatment are less informative