Economics at your fingertips  

Bayesian optimism

Nick Saponara ()
Additional contact information
Nick Saponara: Boston University

Economic Theory, 2018, vol. 66, issue 2, 375-406

Abstract: Abstract Theories of optimism typically hypothesize that optimism is driven by agents changing their beliefs or view of the world. In this paper, we hypothesize that agents maintain their view of the world, but arrive at an optimistic belief by distorting the information used to update beliefs in a motivated way. We behaviorally identify the information used to update beliefs, which may be a distortion of the information the analyst observes. Given this identification, we provide a novel behavioral definition of optimism that alters Dynamic Consistency to account for both the distorted information and the optimistic nature of the distortion.

Keywords: Optimism; Non-Bayesian updating; Motivated reasoning; Subjective information (search for similar items in EconPapers)
JEL-codes: D81 D83 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link) Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from
http://www.springer. ... eory/journal/199/PS2

Access Statistics for this article

Economic Theory is currently edited by Nichoals Yanneils

More articles in Economic Theory from Springer, Society for the Advancement of Economic Theory (SAET) Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla ().

Page updated 2019-04-09
Handle: RePEc:spr:joecth:v:66:y:2018:i:2:d:10.1007_s00199-017-1064-x