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The Better is the Enemy of the Good

In standard economic theory, information helps agents optimize. But providing agents with information about the benefits of an action often fails to encourage that action. This paper proposes a far-reaching behavioral explanation: information may make salient that the benefits of taking an action could be improved and agents may see the potential for improvement as a reason to avoid the action. In an experiment, making more salient how a donation could be improved significantly decreases giving. Self-serving motives dramatically magnify the effect, suggesting why information may be particularly ineffective at encouraging privately costly actions with social or future benefits.

Christine L. Exley, Harvard Business School
Judd Kessler, University of Pennsylvania
Publication Date: 
September, 2017
Publication Status: 
Document Number: 
File Description: 
First version, August 27, 2017