I'll See It When I Believe It - A Simple Model of Cognitive Consistency

Leeat Yariv

No 1352, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: Psychological experiments demonstrate that people exhibit a taste for consistency. Individuals are inclined to interpret new evidence in ways that confirm their pre-existing beliefs. They also tend to change their beliefs to enhance the desirability of their past actions. I present a model that incorporates these effects into an agent's utility function and allows me to characterize when: (i) agents become under- and over-confident, (ii) agents exhibit excess stickiness in action choices, (iii) agents prefer less accurate signals, and (iv) agents are willing to pay in order to forgo signals altogether. Applications to political campaigns and investment decisions are explored.

Keywords: Belief utility; cognitive dissonance; confirmatory bias; overconfidence; selective exposure (search for similar items in EconPapers)
JEL-codes: C90 D72 D83 D91 M30 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2002-02
References: Add references at CitEc
Citations: View citations in EconPapers (38)

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Persistent link: https://EconPapers.repec.org/RePEc:cwl:cwldpp:1352

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