Motivated Belief Updating and Rationalization of Information

Christoph Drobner () and Sebastian Goerg
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Christoph Drobner: Technical University Munich (TUMCS)

Munich Papers in Political Economy from Munich School of Politics and Public Policy and the School of Management at the Technical University of Munich

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 update their beliefs about relative performance more optimistically as direct belief utility increases. This finding provides clean evidence for the optimistic belief updating hypothesis and supports theoretical models with direct belief utility. Moreover, we document that subjects, who received more bad signals, downplay the ego-relevance of the task. Taken together, these findings suggest that subjects use two alternative strategies to protect their ego when presented with objective information.

Keywords: Motivated beliefs; Optimistic belief updating; Direct belief utility; Bayes' rule; Ex-post rationalization. (search for similar items in EconPapers)
JEL-codes: C91 D83 D84 (search for similar items in EconPapers)
Pages: 54 pages
Date: 2021-12
New Economics Papers: this item is included in nep-exp and nep-upt
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Citations: View citations in EconPapers (5)

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https://cms.mgt.tum.de/fileadmin/mgt.tum.de/facult ... _rationalization.pdf

Related works:
Journal Article: Motivated Belief Updating and Rationalization of Information (2024)
Working Paper: Motivated Belief Updating and Rationalization of Information (2022)
Working Paper: Motivated belief updating and rationalization of information (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:aiw:wpaper:18

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