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  5. Mental Models and Learning: The Case of Base-Rate Neglect

Mental Models and Learning: The Case of Base-Rate Neglect

  • Ignacio Esponda
  • Emanuel Vespa
  • Sevgi Yuksel
American Economic Review
vol. 114, no. 3, March 2024
(pp. 752-82)
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Abstract

We experimentally document persistence of suboptimal behavior despite ample opportunities to learn from feedback in a canonical updating problem where people suffer from base-rate neglect. Our results provide insights on the mechanisms hindering learning from feedback. Importantly, our results suggest mistakes are more likely to be persistent when they are driven by incorrect mental models that miss or misrepresent important aspects of the environment. Such models induce confidence in initial answers, limiting engagement with and learning from feedback. We substantiate these insights in an alternative scenario where individuals involved in a voting problem overlook the importance of being pivotal.

Citation

Esponda, Ignacio, Emanuel Vespa, and Sevgi Yuksel. 2024. "Mental Models and Learning: The Case of Base-Rate Neglect." American Economic Review, 114 (3): 752-82. DOI: 10.1257/aer.20201004

Additional Materials

JEL Classification

  • D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
  • D91 Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making