Learning with misattribution of reference dependence

DOI10.1016/J.JET.2022.105473MaRDI QIDQ2155240zbMATH OpenOpenAlexFDO

Authors Tristan Gagnon-Bartsch, Benjamin Bushong

Publication date 15 July 2022

Published in Journal of Economic Theory (Search for Journal in Brave)

Full work available at URL https://doi.org/10.1016/j.jet.2022.105473

zbMATH Keywords

attribution biaslearningmisspecified modelsreference dependence

Mathematics Subject Classification ID

Utility theory (91B16) Memory and learning in psychology (91E40)

Review text

This paper discusses errors in learning that arise when an agent neglects how the sensation of elation or disappointment relative to expectations contributes to the overall utility, and wrongly attributes this component of the utility to the intrinsic value of an outcome. In a sequential-learning environment, the effect of this form of misattribution is modeled. A recency bias is derived: the misattributor's beliefs over-weight recent experiences and under-weight earlier ones. It is also derived, in the long-run, convergence to steady-state beliefs with, for a loss-averse misattributor, a pessimistic bias and a tendency to undervalue prospects in proportion to their variability.

Recommendations

• Reference points and learning
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Cited in

(4)

• Reference points and learning
• Unrealistic expectations and misguided learning
• Mislearning from censored data: The gambler's fallacy and other correlational mistakes in optimal‐stopping problems
• Doob's consistency of a non-Bayesian updating process

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