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Motivated Beliefs and Anticipation of Uncertainty Resolution

Christoph Drobner ()
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Christoph Drobner: Technical University of Munich

Munich Papers in Political Economy from TUM School of Governance at the Technical University of Munich

Abstract: Manipulating subjects' expectations about the resolution of uncertainty, I show that subjects update beliefs about ego-relevant information optimistically when they expect no resolution of uncertainty but neutrally when they expect immediate uncertainty resolution. This finding highlights an important channel of the supply side of motivated beliefs and informs the discussion about the puzzling evidence on belief updating about ego-relevant information. Moreover, I document that subjects expost rationalize information by manipulating their stated beliefs about the ego-relevance of the underlying event depending on the valence of information. This result suggests an additional channel that subjects use to protect their ego utility.

Keywords: Motivated beliefs; Optimistic belief updating; Ex-post rationalization; Bayes' rule; Expectations about uncertainty resolution (search for similar items in EconPapers)
JEL-codes: C91 D83 D84 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2020-11
New Economics Papers: this item is included in nep-exp, nep-neu and nep-upt
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