Cherry Picking

Definition

Cherry picking is the act of selectively choosing data or information that supports one's own position or argument, while ignoring or dismissing evidence that may contradict it. This term is particularly relevant in the context of the problems of imperfect information and asymmetric information in economics.

5 Must Know Facts For Your Next Test

1. Cherry picking can lead to biased decision-making and flawed conclusions, as it fails to consider the full scope of available information.
2. In the context of imperfect information, cherry picking can occur when individuals or organizations selectively present data or evidence that supports their desired outcome, while ignoring or downplaying contradictory information.
3. Asymmetric information, where one party has more or better information than the other, can create opportunities for cherry picking, as the better-informed party can exploit their informational advantage.
4. Cherry picking can be particularly problematic in markets with information asymmetries, such as the used car market, where sellers may selectively disclose information to potential buyers.
5. The practice of cherry picking can undermine the reliability and validity of information, leading to suboptimal decision-making and potentially harmful outcomes.

Review Questions

• Explain how cherry picking can contribute to the problem of imperfect information in economic decision-making.
  • Cherry picking, the selective use of information that supports one's position while ignoring contradictory evidence, can exacerbate the problem of imperfect information in economic decision-making. When individuals or organizations cherry pick data, they present an incomplete and potentially biased picture, making it difficult for decision-makers to accurately assess the full scope of available information. This can lead to suboptimal choices, as decision-makers may rely on incomplete or skewed data, failing to consider the broader context and potential risks or downsides. The practice of cherry picking undermines the reliability and validity of information, contributing to the challenges posed by imperfect information in economic contexts.
• Describe how asymmetric information can create opportunities for cherry picking and how this may impact market outcomes.
  • Asymmetric information, where one party has more or better information than the other, can enable cherry picking and lead to adverse market outcomes. In situations with information asymmetry, the better-informed party may selectively disclose or emphasize information that supports their position, while withholding or downplaying contradictory evidence. This can occur, for example, in the used car market, where sellers may cherry pick information about a vehicle's condition and history to present a more favorable picture to potential buyers. The buyers, lacking full information, may then make decisions based on the incomplete or biased data provided by the sellers, leading to suboptimal outcomes, such as overpaying for a vehicle or purchasing a car with undisclosed issues. Cherry picking in the presence of asymmetric information can undermine market efficiency and trust, with negative consequences for both buyers and sellers.
• Evaluate the potential long-term consequences of widespread cherry picking in markets and suggest strategies to mitigate its impact.
  • The widespread practice of cherry picking in markets can have significant long-term consequences. If cherry picking becomes a common tactic, it can erode trust and transparency, leading to a breakdown in market efficiency and potentially harmful outcomes for both consumers and producers. For example, if buyers consistently encounter sellers who cherry pick information about products, they may become increasingly skeptical and unwilling to engage in transactions, reducing market liquidity and stifling economic activity. Additionally, the prevalence of cherry picking can incentivize more individuals and organizations to engage in similar practices, further exacerbating the problem. To mitigate the impact of cherry picking, policymakers and market regulators could implement measures to increase transparency, such as mandating the disclosure of relevant information, enforcing truthful advertising standards, and promoting the use of independent third-party assessments. Educating consumers about the risks of cherry picking and encouraging critical thinking when evaluating information can also help counter the negative effects of this practice. By addressing the root causes of cherry picking and promoting more reliable and balanced information, markets can function more efficiently and equitably, benefiting all participants.

Related terms

Confirmation Bias: The tendency to search for, interpret, favor, and recall information in a way that confirms one's preexisting beliefs or hypotheses.

Selective Perception: The tendency for individuals to notice and focus on information that aligns with their existing beliefs and ignore or discount information that contradicts those beliefs.

Information Asymmetry: A situation in which one party in a transaction has more or better information than the other, which can lead to an imbalance of power and potential for exploitation.