Why Don't We Learn to Accurately Forecast Feelings? How Misremembering Our Predictions Blinds Us to Past Forecasting Errors

Abstract:     
Why do affective forecasting errors persist in the face of repeated disconfirming evidence? Six studies indicate that people fail to perceive the extent of their forecasting error because they do not accurately remember their forecast. In the context of a Super Bowl loss (Study 1), a presidential election (Studies 2A, 2B, and 3), an important purchase (Study 4), and the consumption of a sequence of candies (Study 5), individuals mispredicted their affective reactions to these experiences, but subsequently misremembered their predictions as more accurate than they had actually been. Our findings indicate that this recall error results from people’s tendency to anchor on their current affective state when trying to recall their affective forecasts. Further, those who
exhibited the largest recall errors showed the least learning in subsequent affective forecasts, and reminding people of their actual forecast enhanced learning. These results suggest that a failure to accurately recall one’s past predictions contributes to the perpetuation of forecasting errors and that reminders of initial forecasts facilitate learning from past forecasting mistakes.

Keywords: affective forecasts, prediction errors, memory bias

JEL Classifications: C91, D83

Working Paper Series