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Self-serving recall is not a sufficient cause of optimism: An experiment

Adrián Caballero and Raúl López-Pérez

No 2005, Working Papers from Instituto de Políticas y Bienes Públicos (IPP), CSIC

Abstract: A recent experimental literature has documented that people are (sometimes) asymmetric updaters: Good news are over-weighted, relative to bad news. We contribute to this literature with a novel experimental test of a potential mechanism of asymmetric updating, that is, that people recall better the positive than the negative evidence. In our design, this account predicts inflated posteriors regarding some future financial prize. Contrary to that, the average subject (slightly) underestimates the mode of the posterior beliefs about that payoff prospect. Although subjects tend to exhibit self-serving recall (SSR) in that they remember better the positive realizations of a signal in a memory task, this has little effect on their estimates and the extent and direction of the bias. A difficulty to recall accurately, we conclude, is not a sufficient cause for a positivity bias.

Keywords: Belief Updating; Biases; Motivated Beliefs; Optimism; Self-Serving Recall (search for similar items in EconPapers)
JEL-codes: C91 D03 D80 D83 D84 (search for similar items in EconPapers)
Date: 2020-10
New Economics Papers: this item is included in nep-exp and nep-neu
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