47 Pages Posted: 10 Aug 2012 Last revised: 27 Mar 2017
Date Written: March 26, 2017
People often forget and sometimes fantasize. This paper reports a large-scale experiment on memory errors and their relation to preferential traits including time preference and attitudes toward risk and ambiguity. We observe systematic incidences of false memory in favor of positive events and selective amnesia in forgetting negative events. Intriguingly, both positive delusion and positive confabulation significantly relate to present bias, but this is not the case for positive amnesia. In an intra-person, multiple-self model, we demonstrate that positive false memory, rather than selective amnesia, serves to enhance confidence in one's future self in equilibrium, thereby accounting for our experimental finding.
Keywords: false memory, amnesia, delusion, confabulation, present bias
JEL Classification: C91, D03, D83, Z13
Suggested Citation: Suggested Citation