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The Bayesian Fallacy: Distinguishing Four Kinds of Beliefs

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Khalil, Elias

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Abstract

This paper distinguishes among four kinds of beliefs: conviction, confidence, perception, conception. Conviction concerns self-ability:“I can build these stairs.” Confidence also concerns the self—ut focuses on the assertion of will in the face of weakness of will. Perception is about the environment such as weather prediction. Conception is also about the environment—but usually couched with context. While convictions are noncognitive and nonevidential beliefs, the other beliefs are either cognitive, evidential, or both. This paper uses the terms “cognition” and “evidentiality” as axes to distinguish the four beliefs. While “cognitive beliefs” are about one’s environment, “noncognitive beliefs” are about one’s self. While the cognitive/noncognitive divide is unconventional, it generates a payoff in light of the evidentiality axis. While “evidential beliefs” are correctable via Bayes’s rule, “nonevidential beliefs” are not. However, when the nonevidential belief is about the environment, the evidence can at least make the belief more (or less) warranted—where “warrantability” is a weaker criterion than “correctability.” And when the nonevidential belief is about the self, i.e., a conviction, the evidence cannot even make the belief more (or less) warranted. The evidence itself develops when one tries to test a conviction. This paper highlights that convictions are the basis of tenacity—crucial for entrepreneurship and economic growth. This paper further demonstrates how three major theories of action—standard rationality, normative theory, and procedural rationality—fail to distinguish the four kinds of beliefs. They, hence, commit, although in different ways, a set of confusions called here the “Bayesian fallacy.”

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 8474.

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Date of creation: 26 Apr 2008
Date of revision: 26 Apr 2008
Handle: RePEc:pra:mprapa:8474

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Related research
Keywords: Cognitive Dissonance Internal Motivations (convictions) Normative Theory (embodied cognition) Other Beliefs (confidence perception conception) Procedural Rationality Theory (pragmatism) Self-Perception Theory Standard Rationality Theory

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Find related papers by JEL classification:
B49 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Other
B59 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Other

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References listed on IDEAS
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  2. Samuel Bowles & Herbert Gintis & Melissa Osborne, 2001. "The Determinants of Earnings: A Behavioral Approach," Journal of Economic Literature, American Economic Association, vol. 39(4), pages 1137-1176, December. [Downloadable!] (restricted)
  3. Falk, Armin & Knell, Markus, 2004. "Choosing the Joneses: Endogenous Goals and Reference Standards," CEPR Discussion Papers 4459, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  4. Jon Elster, 1998. "Emotions and Economic Theory," Journal of Economic Literature, American Economic Association, vol. 36(1), pages 47-74, March. [Downloadable!] (restricted)
  5. Jörg Rieskamp & Jerome R. Busemeyer & Barbara A. Mellers, 2006. "Extending the Bounds of Rationality: Evidence and Theories of Preferential Choice," Journal of Economic Literature, American Economic Association, vol. 44(3), pages 631-661, September.
  6. Grether, David M, 1980. "Bayes Rule as a Descriptive Model: The Representativeness Heuristic," The Quarterly Journal of Economics, MIT Press, vol. 95(3), pages 537-57, November. [Downloadable!] (restricted)
  7. Goldsmith, Arthur H & Veum, Jonathan R & Darity, William, Jr, 1997. "The Impact of Psychological and Human Capital on Wages," Economic Inquiry, Oxford University Press, vol. 35(4), pages 815-29, October.
  8. Jean-Pierre Dupuy, 2004. "Intersubjectivity and Embodiment," Journal of Bioeconomics, Springer, vol. 6(3), pages 275-294, 09. [Downloadable!] (restricted)
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