First Impressions Matter: A Model of Confirmatory Bias

Matthew Rabin and Joel L. Schrag

The Quarterly Journal of Economics, 1999, vol. 114, issue 1, 37-82

Abstract: Psychological research indicates that people have a cognitive bias that leads them to misinterpret new information as supporting previously held hypotheses. We show in a simple model that such confirmatory bias induces overconfidence: given any probabilistic assessment by an agent that one of two hypotheses is true, the appropriate beliefs would deem it less likely to be true. Indeed, the hypothesis that the agent believes in may be more likely to be wrong than right. We also show that the agent may come to believe with near certainty in a false hypothesis despite receiving an infinite amount of information.

Date: 1999
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