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Recall distortion and past choices

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  • Heath, Rebecca
  • Roy-Chowdhury, Vivek

Abstract

We explore whether beliefs are distorted to enable optimism about the consequences of past choices. In our experiment, involving over 1000 subjects, individuals are asked to recall a signal. In the treatment group alone, the signal is positively correlated with a favourable unobserved outcome of a prior choice. Our results show that subjects in the treatment group believe the signal was higher, even immediately after transmission. We also obtain some evidence that belief distortions increase after a few days due to memory loss. Finally, subjects distort beliefs in precisely the same way even when they know they will find out the true value at the end of the experiment, implying that the ability to sustain belief distortions indefinitely does not influence the present motive to distort beliefs.

Suggested Citation

  • Heath, Rebecca & Roy-Chowdhury, Vivek, 2025. "Recall distortion and past choices," Journal of Economic Behavior & Organization, Elsevier, vol. 240(C).
    • Handle: RePEc:eee:jeborg:v:240:y:2025:i:c:s0167268125004196
    DOI: 10.1016/j.jebo.2025.107302
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    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • 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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