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Rational truth-avoidance and self-esteem

Author

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  • David Andolfatto
  • Steeve Mongrain
  • Gordon Myers

Abstract

We assume that people have beliefs about their abilities that generate self-esteem, and that self-esteem is valued intrinsically. Individuals face two choices; one of which strictly dominates the other in a pecuniary sense, but necessarily involves gathering information concerning their ability. We lay out the circumstances under which an individual may find it rational to reject the dominant choice, an act that, in psychology is described as "avoiding the situation". We then go on to show that the incentive to avoid the truth is increasing in income/wealth and decreasing in self-esteem, the perceived accuracy of one's self-assessment, and the role that luck plays in generating opportunities.

Suggested Citation

  • David Andolfatto & Steeve Mongrain & Gordon Myers, 2009. "Rational truth-avoidance and self-esteem," Canadian Journal of Economics, Canadian Economics Association, vol. 42(1), pages 141-154, February.
  • Handle: RePEc:cje:issued:v:42:y:2009:i:1:p:141-154
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    References listed on IDEAS

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    1. Gervais, Simon & Odean, Terrance, 2001. "Learning to be Overconfident," Review of Financial Studies, Society for Financial Studies, vol. 14(1), pages 1-27.
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    Cited by:

    1. Isabelle Vialle & Luis Santos-Pinto & Jean-Louis Rullière, 2011. "Self-Confidence and Teamwork : An Experimental Test," Working Papers 1126, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    2. Blanco, M. & Dalton, P.S. & Vargas, J.F., 2013. "Does the Unemployement Benefit Institution Affect the Productivity of Workers? Evidence from a Field Experiment," Discussion Paper 2013-057, Tilburg University, Center for Economic Research.
    3. Valeria Maggian & Antonio Nicolò, 2016. "The wrong man for the job: biased beliefs and job mismatching," Post-Print halshs-01324733, HAL.
    4. Akiko Maruyama, 2013. "Learning about one's own type: a search model with two-sided uncertainty," GRIPS Discussion Papers 12-24, National Graduate Institute for Policy Studies.

    More about this item

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D1 - Microeconomics - - Household Behavior

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