Rationally Biased Learning

Michel de Lara ()
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Michel de Lara: CERMICS - Centre d'Enseignement et de Recherche en Mathématiques et Calcul Scientifique - ENPC - École nationale des ponts et chaussées

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Abstract: Humans display a tendency to pay more attention to bad outcomes, often in a disproportionate way relative to their statistical occurrence. They also display euphorism, as well as a preference for the current state of affairs (status quo bias). Based on the analysis of optimal solutions of infinite horizon stationary optimization problems under imperfect state observation, we show that such human perception and decision biases can be grounded in a form of rationality. We also provide conditions (boundaries) for their possible occurence and an analysis of their robustness. Thus, biases can be the product of rational behavior.

Keywords: imperfect state information; probability overestimation; euphorism bias; pessimism bias; optimal behavior; status quo bias (search for similar items in EconPapers)
Date: 2022-03-22
New Economics Papers: this item is included in nep-cbe, nep-mic and nep-upt
Note: View the original document on HAL open archive server: https://hal.science/hal-01581982v3
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Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:hal-01581982

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