Ignorance Hypothesis Research Articles

The Condorcet Jury Theorem with Information Acquisition

We analyze a committee decision in which individuals with common preferences are uncertain which of two alternatives is better for them. Members can acquire costly information. Private signals and information choice are both continuous. As is consistent with Down’s rational ignorance hypothesis, each member acquires less information in a larger committee and tends to acquire zero information when the committee size goes to infinity. However, with more members, a larger committee can gather more aggregate information in equilibrium. The aggregate information is infinite with the size going to infinity if and only if marginal cost at “zero information acquisition” is zero. When the marginal cost at “zero information acquisition” is positive, the probability of making an appropriate decision tends to be less than one.

Comparative ignorance hypothesis and business training

The comparative ignorance hypothesis, first demonstrated in Heath and Tversky (1991), is that ambiguity aversion is driven by the comparison with more familiar events or more knowledgeable individuals. For example, when own ignorance is perceived to be higher, individuals tend to exhibit stronger ambiguity aversion. We use this insight to provide a theoretical explanation to a well-documented phenomenon of business training having limited, or even negative, effect on post-training profits of program participants.

Why weak patents? Testing the examiner ignorance hypothesis

There is a widespread impression, reflected in recent legislation, that US Patent Office examiners issue many patents of dubious validity, and are insufficiently informed to distinguish these from other valid applications. We address this issue using related application outcomes at the European Patent Office as indicators for patent weakness. We create a proxy for potentially citable prior art using latent semantic analysis of US patent documents, and use this to construct a measure of examiner search effort. We find that US examiners tend to devote more search effort to weaker patents, implying that they can identify a substantial portion of the weak patents that they issue. Why the patent system fails to make better use of examiners' ability to identify weak patents is a question that merits further investigation.

A Test for the Rational Ignorance Hypothesis: Evidence from a Natural Experiment in Brazil

This paper tests the rational ignorance hypothesis by Downs (1957). This theory predicts that people do not acquire costly information to educate their votes. We provide new estimates for the effect of voting participation by exploring the Brazilian dual voting system—voluntary and compulsory—whose exposure is determined by citizens' date of birth. Using a fuzzy RD approach and data from a self-collected survey, we find no impact of voting on individuals' political knowledge or information consumption. Our results corroborate Downs' predictions and refute the conjecture by Lijphart (1997) that compulsory voting stimulates civic education. (JEL D12, D72, D83, O12, O17)

Strategic Decisions under Uncertainty as Cause of Foreign Firms’ Performance Disadvantage

Focusing on the causes of the relative performance disadvantage of foreign-owned companies within host market settings, I argue, on the basis of the comparative ignorance hypothesis that foreign de...

Escolhas e ambiguidades: um estudo sobre o conhecimento comparativo

In this article, two experiments were conducted and data collected from 270 questionnaires applied to undergraduate students at the Universidade de Brasilia, in order to study Fox and Tversky's comparative ignorance hypothesis (CIH) Fox e Tversky (1995). In the first experiment, we tested the CIH, and in the second, we investigated the effects of comparison between lotteries with different degrees of competence in the individual decision making process. The results obtained not only corroborate the CIH, but also deepen its comprehension, analyzing the effect of more than one parameter of comparison in the individual decision making process.

Do ambiguity avoidance and the comparative ignorance hypothesis depend on people’s affective reactions?

Previous work has showed that people are averse to ambiguity and prefer to bet on known probabilities over unknown probabilities. There is also evidence that ambiguity aversion is stronger in comparative contexts rather than in non-comparative contexts. In the present paper we suggest that ambiguity aversion depends on people’s affective reactions and therefore the effect is more evident in comparative contexts because the comparison between the clear and ambiguous alternatives leads to more positive affective reactions toward the former rather than the latter. The present study extends the previous findings while, at the same time, supporting the “comparative ignorance hypothesis”.

Does the Ignorance Hypothesis Undermine the Conceivability and Knowledge Arguments?

According to Daniel Stoljar's ignorance hypothesis, we are ignorant of a type of nonexperiential, experience-relevant truth: a truth that is not about experience but is an essential part of a set of nonexperiential truths that together entail the experiential truths (67-74). l I am not convinced by his arguments for that intriguing claim, insightful though they are. But I will assume its truth and focus on his conditional thesis (ch. 4):

Ambiguity aversion: the explanatory power of indeterminate probabilities

Daniel Ellsberg presented in Ellsberg (The Quarterly Journal of Economics 75:643–669, 1961) various examples questioning the thesis that decision making under uncertainty can be reduced to decision making under risk. These examples constitute one of the main challenges to the received view on the foundations of decision theory offered by Leonard Savage in Savage (1972). Craig Fox and Amos Tversky have, nevertheless, offered an indirect defense of Savage. They provided in Fox and Tversky (1995) an explanation of Ellsberg’s two-color problem in terms of a psychological effect: ambiguity aversion. The ‘comparative ignorance’ hypothesis articulates how this effect works and explains why it is important to an understanding of the typical pattern of responses associated with Ellsberg’s two-color problem. In the first part of this article we challenge Fox and Tversky’s explanation. We present first an experiment that extends Ellsberg’s two-color problem where certain predictions of the comparative ignorance hypothesis are not confirmed. In addition the hypothesis seems unable to explain how the subjects resolve trade-offs between security and expected pay-off when vagueness is present. Ellsberg offered an explanation of the typical behavior elicited by his examples in terms of these trade-offs and in section three we offer a model of Ellsberg’s trade-offs. The model takes seriously the role of imprecise probabilities in explaining Ellsberg’s phenomenon. The so-called three-color problem was also considered in Fox and Tversky (1995). We argue that Fox and Tversky’s analysis of this case breaks a symmetry with their analysis of the two-color problem. We propose a unified treatment of both problems and we present a experiment that confirms our hypothesis.

Rational Ignorance and Political Morality*

People frequently advance political proposals in the name of a goal while remaining apparently indifferent to the fact that those proposals, if implemented, would frustrate that goal. Theorists of “deliberative democracy” purport to avoid this difficulty by arguing that deliberation is primarily about moral not empirical issues. We reject this view (the moral turn) and propose a method (The Display Test) to check whether a political utterance is best explained by the rational ignorance hypothesis or by the moral turn: the speaker must be prepared to openly acknowledge the bad consequences of his political position. If he is, the position is genuinely moral; if he is not, the position evinces either rational ignorance or posturing. We introduce deontological notions to explain when the moral turn works and when it does not. We discuss and reject possible replies, in particular the view that a moral‐political stance insensitive to consequences relies on a distribution of moral responsibility in evildoing. Finally, we show that even the most plausible candidates for the category of purely moral political proposals are best explained by the rational ignorance/posturing hypothesis, if only because enforcing morality gives rise to complex causal issues.

Would rational voters acquire costly information?

We analyze an election in which voters are uncertain about which of two alternatives is better for them. Voters can acquire some costly information about the alternatives. In agreement with Downs's rational ignorance hypothesis, individual investment in political information declines to zero as the number of voters increases. However, if the marginal cost of information is near zero for nearly irrelevant information, there is a sequence of equilibria such that the election outcome is likely to correspond to the interests of the majority for arbitrarily large numbers of voters. Thus, “rationally ignorant” voters are consistent with a well-informed electorate.

Voter Knowledge and Constitutional Change: Assessing the New Deal Experience

This Article is the first to empirically test the theory that voters' knowledge of politics increases during periods of major constitutional change, enabling them to exercise greater control over policy outcomes by disciplining political leaders. Previous research has repeatedly shown that most voters have very low political knowledge levels during times of normal politics. It is therefore important to determine whether such dangerous ignorance persists even during periods when massive constitutional change is on the political agenda. Sadly, the evidence presented here shows that it does. Scholars such as Bruce Ackerman and Akhil Amar have argued that the supermajority amendment requirements of Article V of the Constitution should be set aside because in periods of constitutional change, voters pay heightened attention to politics, increase their levels of political knowledge, and force politicians to conform to the popular will. Article V is seen as inhibiting the will of the majority. These arguments are the latest in a 200-year history of criticism of Article V's supermajority requirements. Ackerman's heightened attention hypothesis is opposed by the theory of rational ignorance, which predicts that voter knowledge of politics should remain low at virtually all times because the insignificance of any one vote to electoral outcomes makes it irrational to invest large amounts of time and effort in the acquisition of political knowledge for the purpose of becoming a better-informed voter. Voter Knowledge and Constitutional Change uses evidence from the New Deal era of constitutional change to test the two theories against each other. The New Deal period was the most significant era of constitutional change in the last 100 years of American history, and is cited by Ackerman and other scholars as a key test of the heightened attention theory. I look at both survey evidence of voter knowledge and qualitative evidence of the degree of constraint from public opinion experienced by political leaders. Both types of evidence strongly support the rational ignorance hypothesis and contradict the heightened attention theory. Survey data shows that voter knowledge increased very little or not at all during the 1930s. Qualitative evidence from three major New Deal policy initiatives that challenged existing constitutional constraints on federal government power show that these policies were developed by political leaders who perceived no increase in constraint by public opinion and in fact saw the voters as largely ignorant. These results cast doubt on both the empirical validity of the heightened attention hypothesis and the normative validity of the major criticisms of Article V. If most of the electorate remains severely ignorant of politics even during periods of massive constitutional upheaval, Article V's supermajority requirements may be necessary to ensure that constitutional change is not enacted through the manipulation of voter ignorance. A supermajority requirement ensures that any constitutional change must get the support of the more knowledgeable minority within the electorate as well as the relatively ignorant majority.

Ambiguity Aversion, Comparative Ignorance, and Decision Context

People typically find bets less attractive when the probability of receiving a prize is more vague or ambiguous (Ellsberg, 1961). According to Fox and Tversky's (1995) comparative ignorance hypothesis, ambiguity aversion is driven by the comparison with more familiar events or more knowledgeable individuals, and diminishes or disappears in the absence of such a comparison. In this paper we emphasize that “comparative ignorance” refers to the state of mind of the decision maker. We extend the comparative ignorance hypothesis by documenting four new ways in which decision context can affect willingness to act under uncertainty that do not rely on the comparative-noncomparative evaluation paradigm used in previous studies. First, people find uncertain bets more attractive when preceded by questions about less familiar items than when preceded by questions about more familiar items. Second, the preference to bet on more familiar domains is less pronounced for the first domain evaluated on a survey than for later domains. Third, people find bets less attractive when they are provided with diagnostic information that they do not know how to use, compared to when they are provided with no such information. Finally, people are sensitive to the relative competence of their counterpart when playing a simple competitive (matching pennies) game, but not when playing a noncompetitive (coordination) game that has the same mixed strategy Nash equilibrium.

Comparative Ignorance and the Ellsberg Paradox

We investigate the evaluation of known (where probability is known) and unknown (where probability is unknown) bets in comparative and non-comparative contexts. A series of experiments support the finding that ambiguity avoidance persists in both comparative and non-comparative conditions. The price difference between known and unknown bets is, however, larger in a comparative evaluation than in separate evaluation. Our results are consistent with Fox and Tversky's (1995) Comparative Ignorance Hypothesis, but we find that the strong result obtained by Fox and Tversky is more fragile and the complete disappearance of ambiguity aversion in non-comparative condition may not be as robust as Fox and Tversky had supposed.

Ambiguity Aversion and Comparative Ignorance

Decisions under uncertainty depend not only on the degree of uncertainty but also on its source, as illustrated by Ellsberg's observation of ambiguity aversion. In this article we propose the comparative ignorance hypothesis, according to which ambiguity aversion is produced by a comparison with less ambiguous events or with more knowledgeable individuals. This hypothesis is supported in a series of studies showing that ambiguity aversion, present in a comparative context in which a person evaluates both clear and vague prospects, seems to disappear in a noncomparative context in which a person evaluates only one of these prospects in isolation.

Why Small Manufacturing Firms Shun DCF

Although there is ample literature on the use of capital budgeting techniques by small firms, there is practically no research available on why small firms don’t use discounted cash flow methods. This paper looks at this rationale issue in die light of Brigham's 10 hypodieses (in Fundamentals of Financial Management, sixth edition). Support is found primarily for Brigham’s ignorance hypothesis, but also for his other hypotheses concerning small firms’ short-run cash flow orientation, the comparatively small size of their projects, the managers’ overall knowledge of their firms, and the irrelevance of value analysis when the value of the firm itself is unknown. Furthermore, small firms seem quite satisfied with their present techniques. Since the chief difficulty of small firms is forecasting future cash flows, changing to more sophisticated techniques offers no obvious and effective remedy for that problem.

Women's satisfaction in close relationships

A review of research on women's satisfaction in close relationships explores the paradox between the images of women in popular books that offer advice on relationship distress, and empirical evidence supporting women's knowledge and expertise in the expressive/interpersonal domain. Images of women portrayed in the popular relationship literature can be characterized by three themes: (a) Ignorance (women don't know what they want); (b) Incompetence (women need to be taught how to relate in close encounters); and (c) Illusion (women and men are “intimate strangers” with distinct and polarized styles of relating). These three themes are reframed as testable hypotheses that are explored through reviews of relevant research literature on close relationships. The ignorance hypothesis is not supported, in that women have been shown to articulate their relationship preferences in at least three areas: demonstrations of affection and caring, clear communication, and equality in allocation of relationship resources. The hypothesis of incompetence is also rejected, in that women have been shown to display effective relationship skills in verbal and nonverbal communication, intimacy of self-disclosure, and social-support, all of which relate to relationship expertise and satisfaction. The intimate stranger hypothesis is explored through a sampling of relationship variables that have been shown to be independent of gender, including motives of intimacy and affiliation, and personality traits related to sex roles and self-monitoring. Applications to psychotherapy with women are considered. It is concluded that attention to gender issues in therapy is essential if clinicians are to address the preference and power differentials that exist between women and men. The focus on gender polarities, however, must be balanced by consideration of interpersonal variables that may transcend the social stereotypes of women and men in close relationships.

Mother and Other Tongue Influence on Learner French

Recent perspectives on language transfer have highlighted the role of psychotypology and have given new life to Newmark's ignorance hypothesis. This paper examines such perspectives in the light of a body of data in French from a beginning learner of that language whose native language is English but who in addition has some knowledge of Irish, Latin, and Spanish. The fact that Spanish emerges as a privileged transfer source seems to point to a psychotypology factor, and certain distributional and contextual evidence appears to show that ignorance is in many cases triggering thè transfers. However, because ignorance does not seem to explain all cases, some speculation is entered into, on the basis of clues in the data, regarding the role of memory codes in transfer.

Changing unsubstantiated belief: Testing the ignorance hypothesis.

Changing unsubstantiated belief: Testing the ignorance hypothesis.

Concept breadth and the childish ignorance hypothesis.

Concept breadth and the childish ignorance hypothesis.