Rational Truth-Avoidance and Self-Esteem

David Andolfatto (), Steeve Mongrain () and Gordon Myers ()
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Gordon Myers: Simon Fraser University

Discussion Papers from Department of Economics, Simon Fraser University

Abstract: We assume that people have beliefs about their abilities, that these generate self-esteem, and that self-esteem is valued intrinsically. Individuals face two choices; one of which strictly dominates the other in a pecuniary sense, but necessarily involves gathering information concerning one's (unobserved) ability. We lay out the circumstances under which an individual may find it rational to reject the dominant choice; an act which, in social psychology is described as avoiding the situation, but which we label truth-avoidance. We find that the incentive to avoid the truth is increasing in income and decreasing in self-esteem, the perceived accuracy of one's self-assessment, and the role which luck plays in generating opportunities.

Keywords: self-esteem; confidence; signal-extraction; truth-avoidance. (search for similar items in EconPapers)
JEL-codes: D83 D1 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe and nep-hpe
Date: Written
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