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Rational Truth-Avoidance and Self-Esteem



We assume that people have beliefs about their abilities, that these 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 one's (unobserved) ability. We lay out the circumstances under which an individual may find it rational to reject the dominant choice; an act which, in social psychology is described as avoiding the situation, but which we label truth-avoidance. We find that the incentive to avoid the truth is increasing in income and decreasing in self-esteem, the perceived accuracy of one's self-assessment, and the role which luck plays in generating opportunities.

Suggested Citation

  • David Andolfatto & Steeve Mongrain & Gordon Myers, 2007. "Rational Truth-Avoidance and Self-Esteem," Discussion Papers dp07-08, Department of Economics, Simon Fraser University.
  • Handle: RePEc:sfu:sfudps:dp07-08

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    References listed on IDEAS

    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, Mariana & Dalton, Patricio S. & Vargas, Juan F., 2013. "Does the Unemployment Benefit Institution affect the Productivity of Workers? Evidence from a Field Experiment," CAGE Online Working Paper Series 178, Competitive Advantage in the Global Economy (CAGE).
    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


    self-esteem; confidence; signal-extraction; truth-avoidance.;

    JEL classification:

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

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