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On Prior Confidence and Belief Updating

Author

Listed:
  • Kenneth Chan
  • Gary Charness
  • Chetan Dave
  • J. Lucas Reddinger

Abstract

We investigate the difference between confidence in a belief distribution versus confidence over multiple priors using a lab experiment. Theory predicts that the average Bayesian posterior is affected by the former but is unaffected by the latter. We manipulate confidence over multiple priors by varying the time subjects view a black-and-white grid, of which the relative composition represents the prior. We find that when subjects view the grid for a longer duration, they have more confidence, under-update more, placing more weight on priors and less weight on signals when updating. Confidence within a belief distribution is varied by changing the prior beliefs; subjects are insensitive to this notion of confidence. Overall we find that confidence over multiple priors matters when it should not and confidence in prior beliefs does not matter when it should.

Suggested Citation

  • Kenneth Chan & Gary Charness & Chetan Dave & J. Lucas Reddinger, 2024. "On Prior Confidence and Belief Updating," Papers 2412.10662, arXiv.org.
    • Handle: RePEc:arx:papers:2412.10662
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    References listed on IDEAS

    as
    1. Ned Augenblick & Eben Lazarus & Michael Thaler, 2021. "Overinference from Weak Signals and Underinference from Strong Signals," Papers 2109.09871, arXiv.org, revised Jun 2024.
    2. Ben Greiner, 2015. "Subject pool recruitment procedures: organizing experiments with ORSEE," Journal of the Economic Science Association, Springer;Economic Science Association, vol. 1(1), pages 114-125, July.
    3. Alexander Coutts, 2019. "Good news and bad news are still news: experimental evidence on belief updating," Experimental Economics, Springer;Economic Science Association, vol. 22(2), pages 369-395, June.
    4. Gary Charness & Ryan Oprea & Sevgi Yuksel, 2021. "How do People Choose Between Biased Information Sources? Evidence from a Laboratory Experiment," Journal of the European Economic Association, European Economic Association, vol. 19(3), pages 1656-1691.
    5. Gary Charness & James Cox & Catherine Eckel & Charles Holt & Brian Jabarian, 2023. "The Virtues of Lab Experiments," CESifo Working Paper Series 10796, CESifo.
    6. John J. Conlon & Laura Pilossoph & Matthew Wiswall & Basit Zafar, 2018. "Labor Market Search With Imperfect Information and Learning," Working Papers 2018-068, Human Capital and Economic Opportunity Working Group.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • 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

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