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Memory overload and asymmetric underreaction

Author

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  • Goette, Lorenz
  • Han, Hua-Jing
  • Leung, Benson Tsz Kin

Abstract

We show that greater memory overload results in a disproportionately greater underreaction to belief-challenging information compared to belief-confirming information. In an experiment, we keep constant the information subjects receive but vary the difficulty of memorizing the signals. In the treatment condition, the preceding signal disappears as the next signal appears; in the control condition, the preceding signal remains visible. Memory load is therefore greater in the treatment than in the control condition. We find that in the treatment condition, subjects underreact more to belief-challenging information than in the control condition, but updating to belief-confirming information is not significantly affected. Our results caution against information campaigns that ignore the roles of memory load and attention.

Suggested Citation

  • Goette, Lorenz & Han, Hua-Jing & Leung, Benson Tsz Kin, 2026. "Memory overload and asymmetric underreaction," Games and Economic Behavior, Elsevier, vol. 159(C), pages 268-285.
    • Handle: RePEc:eee:gamebe:v:159:y:2026:i:c:p:268-285
    DOI: 10.1016/j.geb.2026.06.012
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    More about this item

    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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