nsacpi
Expects Yuge Games
That's right. I think this finding is very useful. It highlights how sometimes people's beliefs become unmoored from reality.
There is an interesting academic literature on the topic.
Can you summarize the work by Benabou and Tirole on beliefs?
Roland Bénabou and Jean Tirole have written several influential papers on the economics and psychology of beliefs, self-confidence, motivated reasoning, and willful ignorance. Their joint work (sometimes with coauthors) forms one of the core foundations of modern behavioral economics on endogenous beliefs. Here are the main contributions, summarized by paper/theme:
1. “Self-Confidence and Personal Motivation” (Quarterly Journal of Economics, 2002)
- Most cited and foundational paper.
- Key idea: People have a demand for self-confidence (believing they have high ability or that effort pays off). Because true information can destroy this valuable self-view, individuals may engage in strategic forgetting, selective memory, or self-signaling to protect or rebuild self-confidence.
- Introduces the “personal motivation” motive for distorted beliefs: maintaining optimism or self-esteem increases future effort and welfare in the presence of time inconsistency (hyperbolic discounting or similar problems).
- People may deliberately suppress negative information or choose to remain ignorant even when information is free.
2. “Willpower and Personal Rules” (Quarterly Journal of Economics, 2004)
- Closely related: individuals use internal commitments (“personal rules”) and motivated beliefs as self-control devices.
- Example: an individual may cling to the belief “I am not the kind of person who gives in to temptation” as a way to resist immediate gratification.
- Beliefs act as imperfect commitment technology when external commitment is unavailable.
3. “Incentives and Prosocial Behavior” (American Economic Review, 2006)
- Shows how extrinsic incentives can crowd out intrinsic motivation by hurting the agent’s self-image or signaling that the task is undesirable.
- When rewards are offered, people infer “if they have to pay me so much, it must not be inherently worthwhile or I must not be very generous,” leading them to revise beliefs downward about themselves and reduce effort once incentives are removed.
4. “Identity, Morality, and Taboos: Beliefs as Assets” (working paper, later parts incorporated in other works)
- Treats moral identity and taboos as another form of belief-based commitment device.
- Repressing certain thoughts or maintaining the belief “I would never do X” helps resist future temptation.
5. “Mindful Economics: The Production, Consumption, and Value of Beliefs” (Journal of Economic Perspectives, 2016, with Roland Bénabou)
- Synthetic overview of the whole research program.
- Three main motives for distorted beliefs:
- Consumptive value (beliefs feel good → “anticipatory utility” or savoring/dread)
- Self-image / ego utility (demand for self-confidence)
- Functional value (beliefs affect future motivation and behavior → “motivational utility”)
- Models beliefs as an asset that people produce (through selective recall, biased inference, reality denial) and consume, with a “belief utility function” alongside standard material utility.
6. “Narratives, Imperatives, and Moral Reasoning” (Review of Economic Studies, 2024, with Armin Falk and Jean Tirole)
- Recent work on collective beliefs and moral behavior.
- Shows how groups and individuals maintain moral imperatives (“thou shalt not…”) through motivated reasoning and repression of trade-offs, even when those imperatives are socially beneficial.
Overarching Themes Across All Papers
- Beliefs are not passive; people actively manage them because beliefs affect utility directly and indirectly (through motivation).
- People trade off realism versus happiness/motivation (the “Bayesian” cost of distortion versus the hedonic or functional benefit).
- This explains phenomena such as denial, wishful thinking, self-handicapping, hypocrisy, taboo topics, overconfidence, resistance to information, and the persistence of ideology or religion.
In short, Bénabou & Tirole essentially created the modern economic theory of motivated beliefs and self-deception, showing that departures from rational expectations can be rational (second-best) when people have time-inconsistent preferences or care about their self-image. Their framework has been extraordinarily influential in behavioral economics, political economy, and organizational economics.