Information Delivery under Endogenous Communication: Experimental Evidence from the Indian Demonetization

• Development Workshop

Date and Location

Tuesday, November 7, 2017, 4:10 PM - 5:30 PM
ARE Library Conference Room, 4101 Social Sciences and Humanities

Abstract

To inform the public, how should policymakers disseminate information: by broadcasting widely (e.g., via mass media), or letting word spread from a small number of initially informed “seed” individuals? While conventional wisdom suggests more information is better, we argue that it may not be when participation in social learning is endogenous. In a field experiment during the chaotic 2016 Indian demonetization, we vary how information is delivered to villages: the number informed (broadcasting versus seeding) and whether it is common knowledge who is informed. Our results are consistent with four predictions of a signaling model in which, endogenously, people are more willing to engage in learning about information considered scarcer. First, without common knowledge, broadcasting does cause more conversations than seeding. Second, under seeding, adding common knowledge increases conversations. Third, holding common knowledge fixed, broadcasting decreases conversations relative to seeding. Fourth, when broadcasting, adding common knowledge also decreases conversations. Moreover, the treatments that increase (decrease) conversations also lead to better (worse) knowledge and incentivized decisions.