Demand for information about potential wins and losses: Does it matter if information matters?

Abstract

The ostrich effect refers to the observation that people prioritize gathering information about prospectively positive financial outcomes. It is especially problematic when information about negative and positive outcomes is equally useful for making sound financial decisions. Yet, it is unclear to what extent this phenomenon is moderated by whether outcome information is useful for making choices. Here, we test whether making outcome information instrumental to choice moderates the ostrich effect by randomly assigning 800 adults to one of two computer-based gambling tasks, one in which they chose between two 50/50 win/lose gambles and another in which the computer chose one for them at random. The four possible outcomes were concealed by win/loss marked tiles, and participants were required to reveal three of the four possible outcomes before a gamble could be selected. The key finding was that demand for full information about losses increased significantly when participants made their own choices, and thus, outcome information was instrumental. The findings suggest that information about losses is de-prioritized particularly when people cannot take action to influence payoffs.