Motivated Beliefs, Independence and Cooperation

67 Pages Posted: 8 Jul 2021 Last revised: 26 Jan 2023

See all articles by Wei Huang

Wei Huang

The Chinese University of Hong Kong (CUHK) - CUHK Business School

Yu Wang

Southwestern University of Finance and Economics (SWUFE) - China Center for Behavior Economics and Finance

Xiaojian Zhao

Monash University - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: April 2022

Abstract

Humans are social animals but sometimes stay alone. The paper investigates the connection between an intraperson game and an interperson interaction. Motivated beliefs supplied from memory management due to present bias in the individual investment problem give rise to a positive spillover on others through social interactions. Our result establishes a positive relationship between overconfidence and prosocial behaviors and suggests that a high frequency of social interactions reduces an individual's tendency to cooperate with others, exacerbating the freeriding problem. Our empirical finding shows that people in countries with indulgent cultures tend to be more confident in terms of Rosenberg's self-competence score, individuals living in countries with a high population density or an extended family system appear less confident, and those in countries with high self-competence scores are more agreeable in Big Five personality traits, largely supporting our model's implications.

Keywords: motivated beliefs, self-confidence, present bias, cooperation, cultural difference

JEL Classification: D01, D91, O57, Z10

Suggested Citation

Huang, Wei and Wang, Yu and Zhao, Xiaojian, Motivated Beliefs, Independence and Cooperation (April 2022). Available at SSRN: https://ssrn.com/abstract=3874297 or http://dx.doi.org/10.2139/ssrn.3874297

Wei Huang (Contact Author)

The Chinese University of Hong Kong (CUHK) - CUHK Business School ( email )

Cheng Yu Tung Building
12 Chak Cheung Street
Shatin, N.T.
Hong Kong

Yu Wang

Southwestern University of Finance and Economics (SWUFE) - China Center for Behavior Economics and Finance ( email )

Liutai Road 555
Wenjiang
China

Xiaojian Zhao

Monash University - Department of Economics ( email )

Australia

HOME PAGE: http://https://sites.google.com/site/xjzhao81/

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