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The Curse of Knowledge in Economic Settings: An Experimental Analysis

Camerer, Colin and Loewenstein, George and Weber, Martin (1989) The Curse of Knowledge in Economic Settings: An Experimental Analysis. Journal of Political Economy, 97 (5). pp. 1232-1254. ISSN 0022-3808. http://resolver.caltech.edu/CaltechAUTHORS:20110214-111401287

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Abstract

In economic analyses of asymmetric information, better-informed agents are assumed capable of reproducing the judgments of less-informed agents. We discuss a systematic violation of this assumption that we call the "curse of knowledge." Better-informed agents are unable to ignore private information even when it is in their interest to do so; more information is not always better. Comparing judgments made in individual-level and market experiments, we find that market forces reduce the curse by approximately 50 percent but do not eliminate it. Implications for bargaining, strategic behavior by firms, principal-agent problems, and choice under un-certainty are discussed.


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http://www.jstor.org/stable/1831894PublisherUNSPECIFIED
Additional Information:© 1989 The University of Chicago.
Record Number:CaltechAUTHORS:20110214-111401287
Persistent URL:http://resolver.caltech.edu/CaltechAUTHORS:20110214-111401287
Official Citation:The Curse of Knowledge in Economic Settings: An Experimental Analysis Colin Camerer, George Loewenstein and Martin Weber The Journal of Political Economy Vol. 97, No. 5 (Oct., 1989), pp. 1232-1254 Published by: The University of Chicago Press Article Stable URL: http://www.jstor.org/stable/1831894
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:22171
Collection:CaltechAUTHORS
Deposited By: Tony Diaz
Deposited On:10 Mar 2011 23:36
Last Modified:26 Dec 2012 12:55

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