Are We All Better Drivers than Average? Self-Perception and Biased Behaviour
This Paper studies a model where individuals have imperfect self-knowledge and learning is costly. It shows that the endogenous decision to collect information before taking an action creates a systematic and testable bias in the aggregate behaviour of agents in the economy. More precisely, individuals distort the information acquisition procedure so as to favour the possibility of undertaking the action that generates the highest benefits in some states, even if it also generates the biggest losses in some others. The Paper thus explains within a rational framework why 80% of individuals may perceive themselves as being brighter, better drivers and more able entrepreneurs than their average peer. Applications to biases in career choices and judicial decisions are discussed.
|Date of creation:||Oct 2002|
|Date of revision:|
|Contact details of provider:|| Postal: Centre for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ.|
Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820
|Order Information:|| Email: |
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Rabin, Matthew, 1995.
"Moral Preferences, Moral Constraints, and Self-Serving Biases,"
Department of Economics, Working Paper Series
qt97r6t5vf, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Matthew Rabin., 1995. "Moral Preferences, Moral Constraints, and Self-Serving Biases," Economics Working Papers 95-241, University of California at Berkeley.
- Caplin, A. & Leahy, J., 1999.
"The Supply of Information by a Concerned Expert,"
99-08, C.V. Starr Center for Applied Economics, New York University.
- R. Benabou & J. Tirole, 1999.
"Self-Confidence: Intrapersonal Strategies,"
Princeton Economic Theory Papers
00s1, Economics Department, Princeton University.
- Manove, M. & Padilla, A.J., 1997.
"Banking (Conservatively) with Optimists,"
9718, Centro de Estudios Monetarios Y Financieros-.
- Andrew Caplin & John Leahy, 2001. "Psychological Expected Utility Theory and Anticipatory Feelings," The Quarterly Journal of Economics, Oxford University Press, vol. 116(1), pages 55-79.
- Manove, M., 1995. "Entrepreneurs, Optimism, and the Competitive Edge," UFAE and IAE Working Papers 296.95, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
- Juan D. Carrillo & Thomas Mariotti, 2000. "Strategic Ignorance as a Self-Disciplining Device," Review of Economic Studies, Oxford University Press, vol. 67(3), pages 529-544.
When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:3603. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.