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Making Sense: An Esteem-based Model of Collective Delusions
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Bonn Applied Microeconomics Seminar |
Place: IZA, Schaumburg-Lippe-Straße 9, Conference Room (2:15 p.m.) |
Date: 09.01.2024, 12:00 - 13:30 |
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Abstract: |
People tend to rationalize giving in to their biases and vices by constructing justifications for them. We provide a model of such self-deception in interactions where people value a reputation as a reasonable, evidence-based decision-maker. The model produces complementarities in self-deception: Ann’s rationalizations undermine her ability to critically judge Bob’s actions, allowing Bob to indulge in more rationalization. Complementarities also occur among opposing political partisans: Republican rationalizations allow Democrats to attribute any policy disagreements to Republicans’ folly, thus encouraging Democrats’ own self-deception. This results in the existence of multiple equilibria: one where people are realistic and a fully polarized one, where both sides rationalize away all inconvenient evidence. |
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For more information, please contact seminar@iza.org
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