A key question in the literature on motivated reasoning and self-deception is how motivated beliefs are sustained in the presence of feedback. In this paper, we explore dynamic motivated belief patterns after feedback. We establish that positive feedback has a persistent effect on beliefs. Negative feedback, instead, influences beliefs in the short-run, but this effect fades over time. We investigate the mechanisms of this dynamic pattern, and provide evidence for an asymmetry in the recall of feedback. Finally, we establish that, in line with theoretical accounts, incentives for belief accuracy mitigate the role of motivated reasoning.

/pdf/the-dynamics-of-motivated-beliefs-4idrrhvq9z.pdf

The Dynamics of Motivated Beliefs

There is ample evidence that the average person thinks he or she is more skilful, more beautiful and kinder than others1,2 and that such overconfidence may result in substantial personal and social costs3–8. To explain the prevalence of overconfidence, social scientists usually point to its affective benefits, such as those stemming from a good self-image or reduced anxiety about an uncertain future9–13. An alternative theory, first advanced by evolutionary biologist Robert Trivers14–16, posits that people self-deceive into higher confidence to more effectively persuade or deceive others. Here we conduct two experiments (combined n = 688) to test this strategic self-deception hypothesis. After performing a cognitively challenging task, half of our subjects are informed that they can earn money if, during a short face-to-face interaction, they convince others of their superior performance. We find that the privately elicited beliefs of the group that was informed of the profitable deception opportunity exhibit significantly more overconfidence than the beliefs of the control group. To test whether higher confidence ultimately pays off, we experimentally manipulate the confidence of the subjects by means of a noisy feedback signal. We find that this exogenous shift in confidence makes subjects more persuasive in subsequent face-to-face interactions. Overconfidence emerges from these results as the product of an adaptive cognitive technology with important social benefits, rather than some deficiency or bias. Why are people so often overconfident? Schwardmann and van der Weele show that people self-deceive into higher confidence if they have the opportunity to persuade others for profit and that higher confidence aides persuasion.

/pdf/deception-and-self-deception-1e9b91mhhy.pdf

Deception and self-deception

We suggest that overconfidence (conscious or unconscious) is motivated in part by strategic considerations, and test this experimentally. We find compelling supporting evidence in the behavior of participants who send and respond to others’ statements of confidence about how well they have scored on an IQ test. In two-player tournaments where the higher score wins, a player is very likely to choose to compete when he knows that his own stated confidence is higher than the other player’s, but rarely when the reverse is true. Consistent with this behavior, stated confidence is inflated by males when deterrence is strategically optimal and is instead deflated (by males and females) when luring (encouraging entry) is strategically optimal. This behavior is consistent with the equilibrium of the corresponding signaling game. Overconfident statements are used in environments that seem familiar, and we present evidence that suggests that this can occur on an unconscious level.

https://www.econstor.eu/bitstream/10419/89632/1/cesifo_wp4517.pdf

Self-confidence and strategic behavior

We conduct a laboratory experiment to study how advice by a more experienced and better-informed person affects an individual's entry into a real-effort tournament and the gender gap. Our experiment is motivated by the concerns raised by approaching the gender gap through affirmative action policies. Overall, advice improves the entry decision of subjects, in that forgone earnings due to wrong entry decisions go significantly down. The improvements are mainly driven by increased entry of strong-performing women, who also become more confident, and reduced entry of weak-performing men. We find that the overall gender gap persists even though it disappears among low and strong performers. The persistence is due to an emerging gender gap among intermediate performers driven by women (men) following more the advice to stay out of (enter) the tournament in this performance group. This paper was accepted by Uri Gneezy, behavioral economics.

/pdf/the-impact-of-advice-on-women-s-and-men-s-selection-into-4niv133n0u.pdf

The impact of advice on women's and men's selection into competition

This paper studies the role of consistency as a signaling device. We propose a two-period model that highlights the informativeness of consistency as a signal of skills and allows for the analysis of consequences for behavior. In a simple principal–agent experiment, we test the basic intuition of the model. We show that consistency is indeed associated with skills. Consequently, consistency is valued by others, inducing people to act consistently. Data, as supplemental material, are available at http://dx.doi.org/10.1287/mnsc.2016.2459. This paper was accepted by Uri Gneezy, behavioral economics.

Consistency as a Signal of Skills

In this paper we analyze how image utility can lead to misreporting of private information in contexts where truthful reports maximize monetary outcomes. In a controlled experiment, subjects go through a series of quiz questions and subsequently report a performance measure. We vary if reports are made to an audience or not. In an additional feedback treatment, reports are also stated to an audience and afterwards the experimenter publicly veries if reports were correct. We nd that in the audience treatment, stated reports are signicantly higher relative to the private treatment as well as the feedback treatment. Our ndings suggest that overcondent appearance might be a consequence of social approval seeking. (JEL: C91, D03, D82, D83)

/pdf/image-and-misreporting-46o1tbcdht.pdf

Image and misreporting

This paper studies the influence of information on entry choices in a competition with a controlled laboratory experiment. We investigate whether information provision attracts mainly high productivity individuals and reduces competition failure, where competition failure occurs when a subject loses the competition because the opponent holds a higher productivity. Information on the opponent is a promising nudge to raise individuals' awareness towards the complexity of the decision problem and to update beliefs about success. In the experiment, subjects face the choice between a competition game and a safe outside option. We analyze subjects' entry behavior with a benchmark treatment without information and three treatments, where we exogenously manipulate the information on the opponents. Our results are, (1) information on the productivity distribution of all potential opponents reduces competition failures by more than 50%, (2) information on the distribution is sufficient, i.e. precise information on the matched opponent's type does not further diminish failure rates.

/pdf/information-and-competition-entry-12gl2blqbo.pdf

Information and competition entry

Information and Competition Entry

In this paper we ask if reports of private information about skills, abilities or achievements are affected by image concerns. We develop a simple model that illustrates how image utility can lead to misreporting of private information in contexts where truthful reports maximize monetary outcomes. In addition, we test the model's predictions in a controlled lab experiment. In the experiment, all subjects go through a series of quiz questions and subsequently report a performance measure. We vary if reports are made to an audience or not and find evidence for image effects. In the audience treatment, stated reports are significantly higher than in the private treatment. This suggests that overconfident appearance might be a consequence of social approval seeking. We also find that men state higher self-assessments than women. This gender difference seems to be driven by men responding more strongly to the presence of an audience.

Image and Misreporting

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Image and misreporting

Information and competition entry

Information and Competition Entry

Image and Misreporting

Image and Misreporting