Researchers study how people update beliefs with new information
Economists from Carnegie Mellon University, Lehigh University and LSE published a study in Econometrica examining belief updating.
Study compares inference and forecast problems
The research team analyzed two specific scenarios involving how individuals process signals about an underlying state. In the first scenario, participants updated their beliefs about the current state based on new data. The second scenario involved updating beliefs regarding future outcomes that depend on that same underlying state.
Participants showed varying reaction patterns
Results indicated that participants often underreacted or overreacted when hearing new information about a topic. These responses changed depending on the specific environment in which the information was received. The study notes that economists have not reached a consensus on why these variations occur.
Reported by one outlet
Only one outlet has published this. Nothing here has been checked against a second report, so read it as that outlet's account and follow the link below for the original.
Reported by
1 independent outlet. Headline as published. Links open the original report.