%0 Report
        %A Drobner, Christoph
%A Goerg, Sebastian J.
        %T Motivated Belief Updating and Rationalization of Information
        %D 2022
        %8 2022 Oct
        %I Institute of Labor Economics (IZA)
        %C Bonn
        %7 IZA Discussion Paper
        %N 15682
        %U https://www.iza.org/index.php/publications/dp15682
        %X We study belief updating about relative performance in an ego-relevant task. Manipulating the perceived ego-relevance of the task, we show that subjects update their beliefs optimistically because they derive direct utility flows from holding positive beliefs. This finding provides a behavioral explanation why and how overconfidence can evolve in the presence of objective information. Moreover, we document that subjects, who received more bad signals, downplay the ego-relevance of the task. Taken together, these findings suggest that subjects use two alternative strategies to protect their ego when presented with objective information.
        %K motivated beliefs
%K optimistic belief updating
%K overconfidence
%K direct belief utility
%K Bayes' rule
%K ex-post rationalization