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Memory Recall Bias of Overconfident and Underconfident Individuals after Feedback

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  • King-King Li

    (Shenzhen Audencia Business School, WeBank Institute of Fintech, Shenzhen University, Shenzhen 518060, China)

Abstract

We experimentally investigate the memory recall bias of overconfident (underconfident) individuals after receiving feedback on their overconfidence (underconfidence). Our study differs from the literature by identifying the recall pattern conditional on subjects’ overconfidence/underconfidence. We obtain the following results. First, overconfident (underconfident) subjects exhibit overconfident (underconfident) recall despite receiving feedback on their overconfidence (underconfidence). Second, awareness of one’s overconfidence or underconfidence does not eliminate memory recall bias. Third, the primacy effect is stronger than the recency effect. Overall, our results suggest that memory recall bias is mainly due to motivated beliefs of sophisticated decision makers rather than naïve decision-making.

Suggested Citation

  • King-King Li, 2022. "Memory Recall Bias of Overconfident and Underconfident Individuals after Feedback," Games, MDPI, vol. 13(3), pages 1-15, May.
    • Handle: RePEc:gam:jgames:v:13:y:2022:i:3:p:41-:d:821723
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    References listed on IDEAS

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    Cited by:

    1. Li, King King & Rong, Kang, 2023. "Real-life investors’ memory recall bias: A lab-in-the-field experiment," Journal of Behavioral and Experimental Finance, Elsevier, vol. 37(C).

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