Does Information Change Behavior?

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Huffman, Wallace (2009)
  • Subject: moral hazard; information economics; consumer behavior; behavioral economics; adverse selection

This paper reviews and synthesizes the theory of information economics and empirical evidence on how information changes the behavior of consumers, households and firms. I show that consumers respond to new information in food experiments but perhaps not in retirement account management. Some seeming perverse consumer/investor decision making may be a result of a complex decision with a low expected payoff.
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