How much do we learn? Measuring symmetric and asymmetric deviations from Bayesian updating through choices

Ilke Aydogan, Aurélien Baillon (), Emmanuel Kemel () and Chen Li
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Ilke Aydogan: IÉSEG School Of Management [Puteaux], LEM - Lille économie management - UMR 9221 - UA - Université d'Artois - UCL - Université catholique de Lille - Université de Lille - CNRS - Centre National de la Recherche Scientifique
Aurélien Baillon: EM - EMLyon Business School, GATE Lyon Saint-Étienne - Groupe d'Analyse et de Théorie Economique Lyon - Saint-Etienne - UL2 - Université Lumière - Lyon 2 - UJM - Université Jean Monnet - Saint-Étienne - EM - EMLyon Business School - CNRS - Centre National de la Recherche Scientifique
Emmanuel Kemel: GREGHEC - Groupement de Recherche et d'Etudes en Gestion - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique
Chen Li: Erasmus University Rotterdam

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Abstract: Belief‐updating biases hinder the correction of inaccurate beliefs and lead to suboptimal decisions. We complement Rabin and Schrag's (1999) portable extension of the Bayesian model by including conservatism in addition to confirmatory bias. Additionally, we show how to identify these two forms of biases from choices. In an experiment, we found that the subjects exhibited confirmatory bias by misreading 19% of the signals that contradicted their priors. They were also conservative and acted as if they missed 28% of the signals.

Keywords: Non-Bayesian updating; conservatism; confirmatory bias; perceived signals; belief elicitation (search for similar items in EconPapers)
Date: 2025-01-01
New Economics Papers: this item is included in nep-exp
Note: View the original document on HAL open archive server: https://hal.science/hal-04911749v1
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Published in Quantitative Economics, 2025, 16 (1), 329-365 p. ⟨10.3982/qe2094⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04911749

DOI: 10.3982/qe2094

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