Motivated belief updating of norms
33 Pages Posted: 28 Dec 2018 Last revised: 15 Jul 2020
Date Written: November 26, 2018
How people process information about others' moral behavior has important implications for understanding the respective peer effects and the effect of social nudges. In this paper, I investigate this updating process of norm beliefs regarding choices when facing monetary-morality tradeoff. In a simple theoretical model, neutral third parties are assumed to update their beliefs about the group norm according to Bayes' rule. If the individual involves in the choice, she then has both ex ante and ex post incentives to ignore others' moral actions and exaggerate others' self-interested actions to maintain a good self-image and justify her own egoistic behavior, if any. Experimental results from a controlled laboratory experiment with both a bystander and a player treatment confirm the theoretical prediction that players have more cynical posterior norm beliefs than bystanders, but the self-serving bias only takes the form of under-updating not over-updating. Besides the norm-related self-deception of players as captured in the theoretical model, who under-update signals of others' honest behavior, both bystander and players also under-update signals of others' lying behavior, implying that a preference for more honest social or group norms probably adds to the motivated reasoning.
Keywords: moral wiggle room; information processing; peer effects; norm compliance; lying behavior
JEL Classification: D83, D84, C91
Suggested Citation: Suggested Citation