Testing models of belief bias: An experiment

• 成果类型: Article
• 署名作者: Coutts, Alexander
• 署名单位: Universidade Nova de Lisboa
• 刊物名称: GAMES AND ECONOMIC BEHAVIOR
• ISSN/ISSBN: 0899-8256
• DOI: 10.1016/j.geb.2018.11.001
• 发表日期: 2019
• 页码: 549-565
• 关键词: beliefs; optimism; pessimism; overconfidence; anticipation; Affective expected utility

摘要

Optimistic beliefs affect important areas of economic decision making, yet direct knowledge on how belief biases operate remains limited. To better understand these biases I introduce a theoretical framework that trades off anticipatory benefits against two potential costs of forming biased beliefs: (1) material costs which result from poor decisions, of Brunnermeier and Parker (2005), and (2) direct psychological costs of distorting reality, of Bracha and Brown (2012). The experiment exploits the potential of the BDM elicitation procedure adopted to lotteries to distort beliefs in different directions, depending on which costs are most important. Relative to an elicitation procedure without distortionary incentives, beliefs are biased in the optimistic direction. Increasing payments for accuracy further increases belief reports, in many cases away from the truth, consistent with psychological costs of belief distortion. Yet the overall results suggest that such theories of optimism fail to explain how beliefs respond to financial incentives. (C) 2018 Elsevier Inc. All rights reserved.