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  • 2022
  • Working Paper

Inattentive Inference

By: Thomas Graeber
  • Format:Print
  • | Language:English
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Abstract

This paper studies how people infer a state of the world from information structures that include additional, payoff-irrelevant states. For example, learning someone’s effort from their observable performance may require accounting for the otherwise irrelevant role of luck. This creates an attribution problem common to all information structures with multiple causes. We report controlled experimental evidence for pervasive overinference about states that affect utility—a form of “omitted variable bias” in belief updating—providing an explanation for a collection of well-known but previously unconnected misattribution patterns. In studying why systematic misattribution arises, we consistently find that errors are not due to excessive task complexity or effort avoidance. Instead, people form incomplete mental models of the information structure and fail to notice the need to account for alternative causes. These mental models are not stable but context-dependent: misattribution responds to a variety of attentional manipulations, but not to changes in the costs of inattention.

Keywords

Belief Formation; Attention; Bounded Rationality; Values and Beliefs; Information; Mathematical Methods

Citation

Graeber, Thomas. "Inattentive Inference." Working Paper, January 2022. (R&R at Journal of the European Economic Association.)
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About The Author

Thomas W. Graeber

Negotiation, Organizations & Markets
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    Cognitive Uncertainty in Intertemporal Choice

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    Measuring the Scientific Effectiveness of Contact Tracing: Evidence from a Natural Experiment

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    Bayesian Signatures of Confidence and Central Tendency in Perceptual Judgment

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More from the Author
  • Cognitive Uncertainty in Intertemporal Choice By: Benjamin Enke and Thomas Graeber
  • Measuring the Scientific Effectiveness of Contact Tracing: Evidence from a Natural Experiment By: Thiemo Fetzer and Thomas Graeber
  • Bayesian Signatures of Confidence and Central Tendency in Perceptual Judgment By: Yang Xiang, Thomas Graeber, Benjamin Enke and Samuel Gershman
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