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The Self-Perpetuation of Biased Beliefs

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  • Wing Suen

Abstract

To overcome strong prior beliefs, strong evidence to the contrary is needed. If a person is predisposed to choosing a certain action, the advice from an advisor who sets a low threshold for recommending the alternative action is not of much use. The preference for like-minded advisors who supply coarse information implies that the advice a person receives is likely to reinforce his existing priors. This effect can lead to polarisation of opinion and the emergence of self-serving beliefs. The learning process is prolonged and the induced short run bias can become perpetual if information is costly. Copyright 2004 Royal Economic Society.

Suggested Citation

  • Wing Suen, 2004. "The Self-Perpetuation of Biased Beliefs," Economic Journal, Royal Economic Society, vol. 114(495), pages 377-396, April.
  • Handle: RePEc:ecj:econjl:v:114:y:2004:i:495:p:377-396
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    1. repec:esx:essedp:734 is not listed on IDEAS
    2. Prat, Andrea & Strömberg, David, 2011. "The Political Economy of Mass Media," CEPR Discussion Papers 8246, C.E.P.R. Discussion Papers.
    3. Johnson, Noel D. & Nye, John V.C., 2011. "Does fortune favor dragons?," Journal of Economic Behavior & Organization, Elsevier, vol. 78(1-2), pages 85-97, April.
    4. Wing Suen, 2010. "Mutual Admiration Clubs," Economic Inquiry, Western Economic Association International, vol. 48(1), pages 123-132, January.
    5. Matthew Gentzkow & Jesse M. Shapiro, 2010. "What Drives Media Slant? Evidence From U.S. Daily Newspapers," Econometrica, Econometric Society, vol. 78(1), pages 35-71, January.
    6. Ruben Durante & Brian Knight, 2012. "Partisan Control, Media Bias, And Viewer Responses: Evidence From Berlusconi'S Italy," Journal of the European Economic Association, European Economic Association, vol. 10(3), pages 451-481, May.
    7. David Strömberg, 2015. "Media and Politics," Annual Review of Economics, Annual Reviews, vol. 7(1), pages 173-205, August.
    8. Santiago Oliveros & Felix Várdy, 2015. "Demand for Slant: How Abstention Shapes Voters' Choice of News Media," Economic Journal, Royal Economic Society, vol. 125(587), pages 1327-1368, September.
    9. Irma Machielse & Danielle Timmermans & Peter Wakker, 2007. "The effects of statistical information on risk ambiguity attitudes, and on rational insurance decisions," Natural Field Experiments 00338, The Field Experiments Website.
    10. Naci H. Mocan & Han Yu, 2017. "Can Superstition Create a Self-Fulfilling Prophecy? School Outcomes of Dragon Children of China," NBER Working Papers 23709, National Bureau of Economic Research, Inc.
    11. Christoph Schinke, 2015. "Capital in the 21st Century and Bias in German Print Media," CESifo Forum, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 16(1), pages 35-39, May.
    12. Matthew Gentzkow & Jesse M. Shapiro, 2006. "Media Bias and Reputation," Journal of Political Economy, University of Chicago Press, vol. 114(2), pages 280-316, April.
    13. Verheul, I. & Carree, M.A., 2008. "Overoptimism among Founders: The Role of Information and Motivation," ERIM Report Series Research in Management ERS-2008-008-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    14. Francesco Sobbrio, 2012. "A Citizen-Editors Model of News Media," RSCAS Working Papers 2012/61, European University Institute.
    15. Agostino Manduchi, 2013. "Non-neutral information costs with match-value uncertainty," Journal of Economics, Springer, vol. 109(1), pages 1-25, May.
    16. Mark Bowden, 2015. "A model of information flows and confirmatory bias in financial markets," Decisions in Economics and Finance, Springer;Associazione per la Matematica, vol. 38(2), pages 197-215, October.
    17. Lennart Erixon & Louise Johannesson, 2015. "Is the psychology of high profits detrimental to industrial renewal? Experimental evidence for the theory of transformation pressure," Journal of Evolutionary Economics, Springer, vol. 25(2), pages 475-511, April.
    18. Robert A. Lowe & Arvids A. Ziedonis, 2006. "Overoptimism and the Performance of Entrepreneurial Firms," Management Science, INFORMS, vol. 52(2), pages 173-186, February.
    19. Edward Glaeser & Cass R. Sunstein, 2014. "Does More Speech Correct Falsehoods?," The Journal of Legal Studies, University of Chicago Press, vol. 43(1), pages 65-93.
    20. Yang, Fanzheng, 2013. "Using laboratory experiments to study otherwise unobservable labor market interactions," ISU General Staff Papers 201301010800004100, Iowa State University, Department of Economics.
    21. Bøg, Martin, 2006. "Whom to Observe?," MPRA Paper 8773, University Library of Munich, Germany, revised 14 May 2008.
    22. Peter P. Wakker & Daniëlle R. M. Timmermans & Irma Machielse, 2007. "The Effects of Statistical Information on Risk and Ambiguity Attitudes, and on Rational Insurance Decisions," Management Science, INFORMS, vol. 53(11), pages 1770-1784, November.

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