I'm interested to know how having access to information, which the opposing party in said negotiation has access to, would hurt you?
It seems unlikely that it hurts you directly in your own negotiation, and more likely is a benefit. It might hurt you indirectly - in that it helps other employees, who are making less than you, potentially make more, and thereby reduce your own theoretical maximum pay (this doesn't seem very compelling though)... But, it seems naively egocentric to believe that, over the course of one's career, that indirect harm would be greater than the potential direct benefit...
There tends to be an assumption that more information is always better but it ultimately depends on how one interprets and uses that information (time and absorptive capacity is important). Most models that push for more information assume perfect decision making (utilizing all the information effectively and optimally). That is not always the case (I might even argue often).
Information overload can lead to analysis paralysis, adding complexity to properly weighing information, and ultimately land into poor decision making processes. In the case of salary information, perhaps I perceive that I'm a below average worker. When handed the average, I might be willing to low ball myself because my thought process may think pay is directly correlated to skill or value given to a company and if I perceive my ability to produce as lower than others, I may be willing, during a negotiation process, to accept low balled values.
In the era of the data deluge, we're learning it's not always the case that more information is better. More and even high quality information needs high quality decision making. If you think of human decision making as flawed (hint: we all make flawed decisions so it is), then our processes will not always make good use of new information, even with high quality concise information. It's very possible for more information to result in undesired or negative effects.
We like to pretend we have all sorts of oracle systems out there but we really don't. In the case of knowing salaries I tend to agree with you: knowing what your competition make is better, most of the time.
The point is that we assume positive effects of more information and ignore negative effects of more information. I wanted to point out that more information is not always better and can lead to degraded decision making. I see it happen often enough. We bombard people with good information and assume it helps, it can, but it doesn't necessarily. Signal to noise, both from information provided and absorptive capacity are important.
I'm not saying we shouldn't provide good information, I'm saying we shouldn't assume providing good information is always beneficial (which a lot of people and models do).
Your example, while potentially leading to a lower salary, is not actually an argument against public salary information, unless you assume the goal is universally higher salaries... Which, in your example, you explicitly state is not the goal of the worker... The prior is, in my opinion, generally the safer assumed goal.
Regardless, yes, more information yields the possibility of incorrect analysis, but I don't think that it's obvious that the information in this instance, the salaries of one's peers, would be of such complexity that knowing it would result in frequent misinterpretation to the detriment of the worker. In fact, given the stated goals of the worker in your example, even they use such information to their own (personal) moral, if not their financial, benefit.
It seems unlikely that it hurts you directly in your own negotiation, and more likely is a benefit. It might hurt you indirectly - in that it helps other employees, who are making less than you, potentially make more, and thereby reduce your own theoretical maximum pay (this doesn't seem very compelling though)... But, it seems naively egocentric to believe that, over the course of one's career, that indirect harm would be greater than the potential direct benefit...
What am I missing here?