Self-serving biases in beliefs about collective outcomes

Shimon Kogan, Florian Schneider and Roberto Weber

No 379, ECON - Working Papers from Department of Economics - University of Zurich

Abstract: Beliefs about collective outcomes, such as economic growth or firm profitability, play an important role in many contexts. We study biases in the formation of such beliefs. Specifically, we explore whether over-optimism and self-serving biases in information processing—documented for beliefs about individual outcomes—affect beliefs about collective outcomes. We find that people indeed exhibit self-serving biases for collective outcomes, and that such biases are similar to biases for individual outcomes. In addition, we investigate whether collective selfdelusion is mitigated by market institutions. If anything, biases in information processing are more pronounced in the presence of a market.

Keywords: Beliefs; Bayes’ rule; asymmetric updating; overconfidence; motivated reasoning (search for similar items in EconPapers)
JEL-codes: C93 I18 Z13 (search for similar items in EconPapers)
Date: 2021-03
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Citations: View citations in EconPapers (5)

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Working Paper: Self-Serving Biases in Beliefs about Collective Outcomes (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:zur:econwp:379

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