Biases in beliefs : experimental evidence

Many papers have reported behavioral biases in belief formation that come on top of standard game-theoretic reasoning. We show that the processes involved depend on the way participants reason about their beliefs. When they think about what everybody else or another "unspeci fied" individual is doing, they exhibit a consensus bias (believing that others are similar to themselves). In contrast, when they think about what their situation-speci c counterpart is doing, they show ex-post rationalization, under which the reported belief is ed to the action and not vice versa. Our ndings suggest that there may not be an "innocent" belief-elicitation method that yields unbiased beliefs. However, if we "debias" the reported beliefs using our estimates of the di fferent eff ects, we find no more treatment eff ect of how we ask for the belief. The "debiasing" exercise shows that not accounting for the biases will typically bias estimates of game-theoretic thinking upwards.