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Information Overload and Confirmation Bias

Author

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  • Goette, L.
  • Han, H. J.
  • Leung, B. T. K.

Abstract

We show that information overload contributes to confirmation bias. In an experiment, we vary the difficulty of information processing as subjects receive a sequence of signals of an unknown state. In the treatment condition, the preceding signal disappears as the next signal appears. In the control condition, the preceding signal remains visible. We find stronger confirmation bias among subjects in the treatment condition. Our results provide empirical support for models that emphasize the role of limited information processing in confirmation bias (Wilson (2014), Leung (2018), Jehiel and Steiner (2018)).

Suggested Citation

  • Goette, L. & Han, H. J. & Leung, B. T. K., 2020. "Information Overload and Confirmation Bias," Cambridge Working Papers in Economics 2019, Faculty of Economics, University of Cambridge.
    • Handle: RePEc:cam:camdae:2019
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    References listed on IDEAS

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    5. Grossman, Zachary & Owens, David, 2012. "An unlucky feeling: Overconfidence and noisy feedback," Journal of Economic Behavior & Organization, Elsevier, vol. 84(2), pages 510-524.
    6. David Eil & Justin M. Rao, 2011. "The Good News-Bad News Effect: Asymmetric Processing of Objective Information about Yourself," American Economic Journal: Microeconomics, American Economic Association, vol. 3(2), pages 114-138, May.
    7. Bock, Olaf & Baetge, Ingmar & Nicklisch, Andreas, 2014. "hroot: Hamburg Registration and Organization Online Tool," European Economic Review, Elsevier, vol. 71(C), pages 117-120.
    8. Steiner, Jakub & Jehiel, Philippe, 2017. "On Second Thoughts, Selective Memory, and Resulting Behavioral Biases," CEPR Discussion Papers 12546, C.E.P.R. Discussion Papers.
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    Cited by:

    1. Athota, Vidya S. & Pereira, Vijay & Hasan, Zahid & Vaz, Daicy & Laker, Benjamin & Reppas, Dimitrios, 2023. "Overcoming financial planners’ cognitive biases through digitalization: A qualitative study," Journal of Business Research, Elsevier, vol. 154(C).

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    More about this item

    Keywords

    information overload; belief formation; confirmation bias;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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