Vision and Flexibility in a Model of Cognitive Dissonance
ISER Discussion Paper No. 771
31 Pages Posted: 11 Feb 2010
Date Written: February 10, 2010
This paper explores the consequences of cognitive dissonance, coupled with time-inconsistent preferences, in an intertemporal decision problem with two distinct goals: acting decisively on early information (vision) and adjusting flexibly to late information (flexibility). The decision maker considered here is capable of manipulating information to serve her self-interests, but a tradeoff between distorted beliefs and distorted actions constrains the extent of information manipulation. Building on this tradeoff, the present model provides a unified framework to account for the conformity bias (excessive reliance on precedents) and the confirmatory bias (excessive attachment to initial perceptions).
Keywords: Cognitive dissonance, Vision, Flexibility, Conformity bias, Confirmatory bias
JEL Classification: D03, D99
Suggested Citation: Suggested Citation