
Quantitative Economics
Journal Of The Econometric Society
Edited by: Stéphane Bonhomme • Print ISSN: 1759-7323 • Online ISSN: 1759-7331
Edited by: Stéphane Bonhomme • Print ISSN: 1759-7323 • Online ISSN: 1759-7331
Quantitative Economics: Jan, 2025, Volume 16, Issue 1
https://doi.org/10.3982/QE2094
p. 329-365
Ilke Aydogan|Aurélien Baillon|Emmanuel Kemel|Chen Li
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.
Ilke Aydogan, Aurélien Baillon, Emmanuel Kemel, and Chen Li
The replication package for this paper is available at https://doi.org/10.5281/zenodo.14040733. The Journal checked the data and codes included in the package for their ability to reproduce the results in the paper and approved online appendices.
December 4, 2024