Alexander Coutts

People often receive feedback influenced by external factors, yet little is known about how this affects self-serving biases. Our theoretical model explores how multi-dimensional uncertainty allows additional degrees of freedom for self-serving bias. In our primary experiment, feedback combining an individual’s ability and a teammate’s ability leads to biased belief updating. However, in a follow-up experiment with a random fundamental replacing the teammate, unbiased updating occurs. A validation experiment shows that belief distortion is greater when outcomes originate from human actions. Overall, our experiments highlight how multi-dimensional environments can enable self-serving biases.

Beyond the direct destructive nature of war, conflict may also impact social preferences, norms, and risk-taking behavior. This paper examines the enduring impact of conflict on preferences and behavior by studying different versions of public goods games conducted nearly two decades after the Rwandan genocide, leveraging variation in radio reception among villages in 1994, which determined exposure to hate-propaganda messages inciting conflict. Results indicate that communities exposed to greater violence exhibit increased cooperation, active punishment, and risk-taking. Exploiting the heterogeneity in participants’ ages of conflict experience, enhanced cooperation is entirely driven by those who were children during the genocide, while norm enforcement through punishment and reward is more prominent among older individuals. Risk-taking increases are observed across all age groups. The results allow for a reassessment of previous research and highlight the psychological imprint of conflict exposure in line with the literature on early childhood development.

Corruption is often harmful for economic development, yet it is difficult to measure due to its illicit nature. We propose a novel corruption game to characterize the interaction between actual political leaders and citizens, and implement it in Northern Mozambique. Contrary to the game-theoretic prediction, both leaders and citizens engage in corruption. Importantly, corruption in the game is correlated with real-world corruption by leaders: citizens send bribes to leaders whom we observe appropriating community money. In corrupt behavior, we identify an important trust dimension captured by a standard trust game.

Natural resources can have a negative impact on the economy through corruption and civil conflict. This paper tests whether information can counteract this political resource curse. We implement a large-scale field experiment following the dissemination of information about a substantial natural gas discovery in Mozambique. We measure outcomes related to the behavior of citizens and local leaders through georeferenced conflict data, behavioral activities, lab-in-the-field experiments, and surveys. We find that information targeting citizens and their involvement in public deliberations increases local mobilization and decreases violence. By contrast, when information reaches only local leaders, it increases elite capture and rent-seeking.

Bayesian updating remains the benchmark for dynamic modeling under uncertainty within economics. Recent theory and evidence suggest individuals may process information asymmetrically when it relates to personal characteristics or future life outcomes, with good news receiving more weight than bad news. I examine information processing across a broad set of contexts: 1) ego relevant, 2) financially relevant, and 3) non value relevant. In the first two cases, information about outcomes is valenced, containing either good or bad news. In the third case, information is value neutral. In contrast to a number of previous studies I do not find differences in belief updating across valenced and value neutral settings. Updating across all contexts is asymmetric and conservative: the former is influenced by sequences of signals received, a new variation of confirmation bias, while the latter is driven by non-updates. Despite this, posteriors are well approximated by those calculated using Bayes’ rule. Most importantly these patterns are present across all contexts, cautioning against the interpretation of asymmetric updating or other deviations from Bayes’ rule as being motivated by psychological biases.

Optimistic beliefs affect important areas of economic decision making, yet direct knowledge on how belief biases operate remains limited. To better understand these biases I introduce a theoretical framework that trades off anticipatory benefits against two potential costs of forming biased beliefs: (1) material costs which result from poor decisions, of Brunnermeier and Parker (2005), and (2) direct psychological costs of distorting reality, of Bracha and Brown (2012). The experiment exploits the potential of the BDM elicitation procedure adopted to lotteries to distort beliefs in different directions, depending on which costs are most important. Relative to an elicitation procedure without distortionary incentives, beliefs are biased in the optimistic direction. Increasing payments for accuracy further increases belief reports, in many cases away from the truth, consistent with psychological costs of belief distortion. Yet the overall results suggest that such theories of optimism fail to explain how beliefs respond to financial incentives.