Biases in Information Selection and Processing: Survey Evidence from the Pandemic

87 Pages Posted: 10 Feb 2021

See all articles by Ester Faia

Ester Faia

Goethe University Frankfurt; Centre for Economic Policy Research (CEPR)

Andreas Fuster

Ecole Polytechnique Fédérale de Lausanne; Swiss Finance Institute; Centre for Economic Policy Research (CEPR)

Vincenzo Pezone

Tilburg University - Department of Finance

Basit Zafar

Arizona State University (ASU) - Department of Economics

Multiple version iconThere are 3 versions of this paper

Date Written: February 09, 2021

Abstract

How people form beliefs is crucial for understanding decision-making un- der uncertainty. This is particularly true in a situation such as a pandemic, where beliefs will affect behaviors that impact public health as well as the aggregate economy. We conduct two survey experiments to shed light on potential biases in belief formation, focusing in particular on the tone of information people choose to consume and how they incorporate this information into their beliefs. In the first experiment, people express their preferences over pandemic-related articles with optimistic and pessimistic headlines, and are then randomly shown one of the articles. We find that respondents with more pessimistic prior beliefs about the pandemic are substantially more likely to prefer pessimistic articles, which we interpret as evidence of confirmation bias. In line with this, respondents assigned to the less preferred article rate it as less reliable and informative (relative to those who prefer it); they also discount information from the article when it is less preferred. We further find that these motivated beliefs end up impacting incentivized behavior. In a second experiment, we study how partisan views interact with information selection and processing. We find strong evidence of source dependence: revealing the news source further distorts information acquisition and processing, eliminating the role of prior beliefs in article choice.

Keywords: Belief updating, confirmatory biases, endogenous informa- tion acquisition, media polarization, source dependence, COVID-19

JEL Classification: D84, D91, E71, I12

Suggested Citation

Faia, Ester and Fuster, Andreas and Pezone, Vincenzo and Zafar, Basit, Biases in Information Selection and Processing: Survey Evidence from the Pandemic (February 09, 2021). SAFE Working Paper No. 307, Available at SSRN: https://ssrn.com/abstract=3783215 or http://dx.doi.org/10.2139/ssrn.3783215

Ester Faia

Goethe University Frankfurt ( email )

Grüneburgplatz 1
Frankfurt am Main, 60323
Germany

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Andreas Fuster

Ecole Polytechnique Fédérale de Lausanne ( email )

Quartier UNIL-Chamberonne
Bâtiment Extranef
CH-1015 Lausanne
Switzerland

Swiss Finance Institute ( email )

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Vincenzo Pezone (Contact Author)

Tilburg University - Department of Finance ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Basit Zafar

Arizona State University (ASU) - Department of Economics ( email )

AZ
United States

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