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How Robust Is the Optimistic Update Bias for Estimating Self-Risk and Population Base Rates?

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  • Neil Garrett
  • Tali Sharot

Abstract

Humans hold unrealistically optimistic predictions of what their future holds. These predictions are generated and maintained as people update their beliefs more readily when receiving information that calls for adjustment in an optimistic direction relative to information that calls for adjustment in a pessimistic direction. Thus far this update bias has been shown when people make estimations regarding the self. Here, we examine whether asymmetric belief updating also exists when making estimations regarding population base rates. We reveal that while participants update beliefs regarding risk in the population in an asymmetric manner, such valence-dependent updating of base rates can be accounted for by priors. In contrast, we show that optimistic updating regarding the self is a robust phenomenon, which holds even under different empirical definitions of desirable information.

Suggested Citation

  • Neil Garrett & Tali Sharot, 2014. "How Robust Is the Optimistic Update Bias for Estimating Self-Risk and Population Base Rates?," PLOS ONE, Public Library of Science, vol. 9(6), pages 1-8, June.
  • Handle: RePEc:plo:pone00:0098848
    DOI: 10.1371/journal.pone.0098848
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    References listed on IDEAS

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    1. Tali Sharot & Alison M. Riccardi & Candace M. Raio & Elizabeth A. Phelps, 2007. "Neural mechanisms mediating optimism bias," Nature, Nature, vol. 450(7166), pages 102-105, November.
    2. Puri, Manju & Robinson, David T., 2007. "Optimism and economic choice," Journal of Financial Economics, Elsevier, vol. 86(1), pages 71-99, October.
    3. Kuhnen, Camelia M. & Knutson, Brian, 2011. "The Influence of Affect on Beliefs, Preferences, and Financial Decisions," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 46(3), pages 605-626, June.
    4. Emma J. Harding & Elizabeth S. Paul & Michael Mendl, 2004. "Cognitive bias and affective state," Nature, Nature, vol. 427(6972), pages 312-312, January.
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    Cited by:

    1. Christoph Drobner, 2020. "Motivated Beliefs and Anticipation of Uncertainty Resolution," Munich Papers in Political Economy 07, Munich School of Politics and Public Policy and the School of Management at the Technical University of Munich.
    2. Filip Gesiarz & Donal Cahill & Tali Sharot, 2019. "Evidence accumulation is biased by motivation: A computational account," PLOS Computational Biology, Public Library of Science, vol. 15(6), pages 1-15, June.
    3. Shimon Kogan & Florian H. Schneider & Roberto A. Weber, 2021. "Self-serving biases in beliefs about collective outcomes," ECON - Working Papers 379, Department of Economics - University of Zurich.

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