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Biases in Beliefs: Experimental Evidence

Dominik Bauer and Irenaeus Wolff

No 109, TWI Research Paper Series from Thurgauer Wirtschaftsinstitut, Universität Konstanz

Abstract: Many papers have reported behavioral biases in belief formation that come on top of standard game-theoretic reasoning. We show that the processes involved depend on the way participants reason about their beliefs. When they think about what everybody else or another ‘unspeci€fied’ individual is doing, they exhibit a consensus bias (believing that others are similar to themselves). In contrast, when they think about what their situation-speci€fic counterpart is doing, they show ex-post rationalization, under which the reported belief is €‹fitted to the action and not vice versa. Our €findings suggest that there may not be an ‘innocent’ belief-elicitation method that yields unbiased beliefs. However, if we ‘debias’ the reported beliefs using our estimates of the di‚fferent e‚ffects, we €find no more treatment e‚ffect of how we ask for the belief. ‘The ‘debiasing’ exercise shows that not accounting for the biases will typically bias estimates of game-theoretic thinking upwards.

Keywords: Belief Elicitation; Belief Formation; Belief-Action Consistency; Framing E‚ffects; Projection; Consensus E‚ffect; Wishful ‘Thinking; Hindsight Bias; Ex-Post Rationalization (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-cbe, nep-evo, nep-exp, nep-gth, nep-hpe, nep-neu and nep-soc
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Citations: View citations in EconPapers (9)

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