Author Abstract
When facing a decision, people often ask others for advice. Whether people use advice in a way that is helpful to them is not well understood. How do people evaluate the usefulness of the advice they receive? Drawing on aspects of behavioral decision theory, this paper argues that the cost of advice, independent of its quality, will affect how it is used. Two experiments were conducted. In both studies, participants were asked to answer different sets of questions about American history. Before they answered some of the questions, I made available advice on the correct answers. In the first study, participants had the opportunity to choose whether to get this advice for free or to pay a certain amount of money for it. In the second study, participants received either free or costly advice by default. The results show that participants used costly advice significantly more than they used free advice.
Paper Information
- Full Working Paper Text
- Working Paper Publication Date: September 2004, revised February 2006
- HBS Working Paper Number: 05-017
- Faculty Unit(s): Technology and Operations Management
