Motivated Belief Updating and Rationalization of Information

Christoph Drobner () and Sebastian Goerg
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Christoph Drobner: TUMCS for Biotechnology and Sustainability, Technical University of Munich, 94315 Straubing, Germany; Faculty of Economics, UniDistance Suisse, 3900 Brig, Switzerland

Management Science, 2024, vol. 70, issue 7, 4583-4592

Abstract: We study belief updating about relative performance in an ego-relevant task. Manipulating the perceived ego relevance of the task, we show that subjects substantially overweight positive information relative to negative information because they derive direct utility from holding positive beliefs. This finding provides a behavioral explanation why and how overconfidence can evolve in the presence of objective information. Moreover, we document that subjects who receive more negative information downplay the ego relevance of the task. These findings suggest that subjects use two alternative strategies to protect their ego when presented with objective information.

Keywords: motivated beliefs; optimistic belief updating; overconfidence; direct belief utility; Bayes’ rule (search for similar items in EconPapers)
Date: 2024
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http://dx.doi.org/10.1287/mnsc.2023.02537 (application/pdf)

Related works:
Working Paper: Motivated Belief Updating and Rationalization of Information (2022)
Working Paper: Motivated Belief Updating and Rationalization of Information (2021)
Working Paper: Motivated belief updating and rationalization of information (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:70:y:2024:i:7:p:4583-4592

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