Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/243173
Authors: 
Drobner, Christoph
Goerg, Sebastian J.
Year of Publication: 
2021
Series/Report no.: 
Beiträge zur Jahrestagung des Vereins für Socialpolitik 2021: Climate Economics
Publisher: 
ZBW - Leibniz Information Centre for Economics, Kiel, Hamburg
Abstract: 
We study belief updating about relative performance in an ego-relevant task. Manipulating beliefs about the ego-relevance of the task, we show that subjects update their beliefs about relative performance more optimistically as direct belief utility increases. This finding provides clean evidence for the optimistic belief updating hypothesis and supports theoretical models with direct belief utility. Moreover, we document that subjects ex-post rationalize information by discounting their beliefs about the ego-relevance of the task as the number of bad signals increases. Taken together, these findings suggest that subjects use two alternative strategies to protect their ego despite the presence of objective information.
Subjects: 
Motivated beliefs
Optimistic belief updating
Direct belief utility
Bayes' rule
Ex-post rationalization
JEL: 
C91
D83
D84
Document Type: 
Conference Paper

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