Intertemporal Self-persuasion

While standard economic models typically view individuals as dispassionate statisticians who try to form accurate beliefs about any decision-relevant variable, intuitive introspection suggests that we have intrinsic preferences over many of our beliefs—e.g., about our own ability, about our own prospects for the future, about our children’s prospects—and that these beliefs may be systematically distorted. Experimental research in psychology and economics has indeed provided evidence of the self-serving malleability of beliefs, a phenomenon often called motivated reasoning (see Kunda, 1990, where the expression is pioneered, and Benabou and Tirole, 2016 for a survey). This paradigm is often cited as a plausible explanation for important real-word phenomena—information avoidance and biased beliefs about health outcomes (Oster et al., 2013; Schwardmann, 2019) or financial status (Olafsson and Pagel, 2018), impasses in bargaining (Babcock and Loewenstein, 1997), and the overconfidence of managers (Huffman et al., 2019). To advance our understanding of motivated cognition, in this project we study the strategies that individuals employ to manufacture their own (future) beliefs.