People will pay more for information just because it comes from a larger list of possibilities, even if the information isn't any more useful.
April 1, 2026
Original Paper
Does the Size of the Signal Space Matter?
SSRN · 6503208
The Takeaway
Economic theory suggests we should only pay for info that helps us make better decisions. However, this study shows that human curiosity is driven by 'entropy reduction'; we value a signal more simply because it narrows down a bigger field of uncertainty, regardless of its practical value.
From the abstract
How does signal space size affect demand for information? We run laboratory experiments where signals vary in cardinality but hold instrumental value constant under expected utility. In our main setting, subjects purchase signals revealing which state determines the outcome of a compound lottery, and willingness to pay rises with signal space size—contradicting expected utility theory. Robustness tests show bids track instrumental value when it varies, ruling out misunderstanding. In another set