Subjective Beliefs And Confidence When Facts Are Forgotten
نویسندگان
چکیده
We run several experiments where people bet on propositions (facts) that they cannot recall with certainty. Forgetting is induced via interference tasks and time delays (up to one year). We use betting preferences to define subjects’ revealed beliefs and their confidence in these beliefs. Forgetting makes revealed beliefs less accurate and reduces the subjective confidence metric as well. Moreover, we find a form of comparative ignorance where subjects are more ambiguity averse when they cannot recall the truth rather than never have learnt it before. In a different vein, we identify an overconfidence pattern: on average, subjects overpay for bets on propositions that they believe in, but underpay for the opposite bets. We formulate a two-signal behavioral model of forgetting that generates all of these patterns. JEL Classification Numbers: D81; C91.
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