|Researchers:||Zafar Basit, Ester Faia, Andreas Fuster, Vincenzo Pezone|
|Category:||Law and Finance|
Topic and objective: Description of the project, including research objective, research methods and contribution to overarching theme. (max. 30 lines)
The concept of self-deception and unrealistic optimism was first defined in the psychology literature. Weinstein (1980) surveyed 200 college students on their future events prospects and found that they were unrealistically optimistic since they focused on factors that improved their future chances. The intentional selection of information is the feature that distinguishes the self-deception framework from other models of distorted Bayesian updating.
The sources and consequences of self-deceiving behavior has been extensively analyzed in the theoretical literature, surveyed in Benabou and Tirole (2016), and are intrinsically related to overconfidence, present bias, and extreme political beliefs. However, empirical evidence remains scarce. We analyze beliefs and information selection during the current Covid-19 pandemic because, as noted in Manski (2017) measuring biases is best done in situation that induce sharp and clear changes in them.
In ongoing work, we have designed a two-wave survey with a representative US sample selected by the private company Qualtrics. In the first survey we have asked participants questions aimed at capturing how worried they are about the economic and health costs of the pandemic. Then, we provide participants with two article headlines, differing in tone, and test whether individuals are more likely to choose headlines aligned with their priors. We then randomize the actual article assigned to survey participants and test whether it affects their posterior beliefs.
In the second wave, we also provide an additional “treatment”, where some participants are showed the source of the article, either before or after having read it. In this way, we can test whether individuals’ tendency to seek news aligned with their beliefs is mitigated or amplified by political factors, such as the trust in news outlet with affine political ideologies.
After having uncovered encouraging preliminary evidence from, the first survey, we are currently in the process of designing and launching the second survey.