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Self-serving biases in beliefs about collective outcomes


Kogan, Shimon; Schneider, Florian H; Weber, Roberto A (2021). Self-serving biases in beliefs about collective outcomes. Working paper series / Department of Economics 379, University of Zurich.

Abstract

Beliefs about collective outcomes, such as economic growth or firm profitability, play an important role in many contexts. We study biases in the formation of such beliefs. Specifically, we explore whether over-optimism and self-serving biases in information processing—documented for beliefs about individual outcomes—affect beliefs about collective outcomes. We find that people indeed exhibit self-serving biases for collective outcomes, and that such biases are similar to biases for individual outcomes. In addition, we investigate whether collective selfdelusion is mitigated by market institutions. If anything, biases in information processing are more pronounced in the presence of a market.

Abstract

Beliefs about collective outcomes, such as economic growth or firm profitability, play an important role in many contexts. We study biases in the formation of such beliefs. Specifically, we explore whether over-optimism and self-serving biases in information processing—documented for beliefs about individual outcomes—affect beliefs about collective outcomes. We find that people indeed exhibit self-serving biases for collective outcomes, and that such biases are similar to biases for individual outcomes. In addition, we investigate whether collective selfdelusion is mitigated by market institutions. If anything, biases in information processing are more pronounced in the presence of a market.

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Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Economics
Working Paper Series > Department of Economics
Dewey Decimal Classification:330 Economics
JEL Classification:I18, C93, Z13
Uncontrolled Keywords:Beliefs, Bayes’ rule, asymmetric updating, overconfidence, motivated reasoning
Language:English
Date:March 2021
Deposited On:12 Mar 2021 11:26
Last Modified:12 Mar 2021 11:28
Series Name:Working paper series / Department of Economics
Number of Pages:65
ISSN:1664-705X
OA Status:Green
Official URL:https://www.econ.uzh.ch/en/research/workingpapers.html?paper-id=1061

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