Quantitative Economics

Journal Of The Econometric Society

Edited by: Stéphane Bonhomme • Print ISSN: 1759-7323 • Online ISSN: 1759-7331

Quantitative Economics: Jan, 2025, Volume 16, Issue 1

How much do we learn? Measuring symmetric and asymmetric deviations from Bayesian updating through choices

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.


Full Content: Print

Supplemental Material

Supplement to "How much do we learn? Measuring symmetric and asymmetric deviations from Bayesian updating through choices"

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.