Muhammed Bulutay

When Confidence Limits Attention: New Evidence on Belief Updating by Ciril Bosch-Rosa, Muhammed Bulutay, and Bernhard Kassner

Focus and Research Question Overprecision—overestimating the accuracy of one’s own beliefs—may shape how people allocate attention to information. This matters because, in an information-rich world, ignoring additional evidence is often framed as rational. However, what seems rational may instead be partially driven by biased confidence in one’s existing views.

Theory and Approach The authors extend a standard model of rational inattention (choosing how much information to process when it is costly) to include overprecision. They predict that overconfident people will update their beliefs less and pay less attention.

Data and Experiment They run a pre-registered online experiment with a representative German sample. Participants estimate average ages in photos, report how uncertain they are, and then update their beliefs after seeing some information.

🎯 Do people ignore information because it’s costly – or because they’re too confident in what they already know?

📊 A new study shows that overconfidence in one’s own beliefs can reduce attention to new information.

Read more 👉 berlinschoolofeconomics.de/about-us/new...

Homepage Princeton University Press is a nonprofit publisher with close connections to Princeton University.

Princeton University Press books are discounted by 50%.

I'd say that's a great deal!

press.princeton.edu?cq_src=googl...

Got to read!

Come and listen to me talk about my work on what consumers think about central bank inflation forecasts and how that affects inflation expectations and trust at the "Theories and Methods in Macroeconomics" Conference.

There are many other interesting projects too!

www.t2m.network/2025/program/

Thanks to everybody who chimed in!

I arrived at the conclusion that (1) there's a lot of interesting stuff about interactions and (2) the figure I was looking for does not exist.

So, I made it myself! Here's a simple illustration of how to control for confounding in interactions:>

The "unexpected compression" in wages continues!

Non-managerial wages (for around 80% of private workforce) continues to grow somewhat stronger than overall wages. This means the reduction in wage inequality post-pandemic has remained, and continued (at a slower pace).

💡 TL;DR: We blend a behavioral bias into rational inattention — and find new welfare implications. Overprecision distorts attention, causing people to suboptimally underreact to information.

📄 Read the full paper:
papers.ssrn.com/sol3/papers....

We find
✅ Feedback reduces overprecision
✅ Higher attention cost → less updating and more error.

But here’s the twist:
❗️Overprecision amplifies the effect of attention costs

This reflects irrational inattention: suboptimal updating due to biased beliefs, not just costs.

We ran a pre-registered experiment to test the model.

🎯Task: Guess average age of people in historical pictures (e.g., Solvay Conference) — before & after seeing info.

Treatments:
- Feedback on belief calibration (overprecision shifter)
- Noise on the info (attention costs shifter)

We extend rational inattention theory to incorporate overprecision.

A new prediction: Reducing costs of info processing has asymmetric welfare effects.

Example: A central bank simplifies communication to reduce inattention.

✅ Overprecise households react more
❌ Underprecise households react less

🚨New paper🚨

Classic rational inattention says people weigh costs vs. benefits when processing info.

We show that overprecision biases this evaluation — leading to misallocated attention.

📄 Theory + experiment
(link in last post)

#econsky @boschrosa.bsky.social

This is something people undervalue about laboratory experiments. One can credibly boost the understanding of instructions, sometimes just by reading them aloud.

I want to try this 😂

🔔 Call for Participation 🔔
Lab² is inviting researchers to take part in a multi-analyst study on the effects of having daughters on various outcomes.
Join this metascience project as a co-author and gain the opportunity to work with SOEP data!

I’ve just completed a revision of a paper titled “Psychological narratives in decision theory: what they are and what they are good for.”

I believe it makes a contribution to the recent literature on the epistemic role of narratives in science, particularly in economics.

ssrn.com/abstract=476...

This is a great opportunity to join us in the beautiful city of Heidelberg.

Let me note that experiments are a common method among the faculty, including macroeconomists and microeconomists.

That sounds like a good idea. I just hope it doesn't have unintended effects like discrimination.

I finally have a publication date for my new Experimental Economics textbook: December 12. Equally as important, I am proud to have negotiated a low price for the book: $38.10...for a nearly 800 page book!
You can find the book here: www.amazon.com/Experimental...

Whenever I post about climate, skeptical folks inevitable respond with this graph. So I decided to do something radical: actually read the underling scientific paper and ask the authors.

As it turns out, it actually says the opposite of what skeptics claim: www.theclimatebrink....

Much of the recent literature uses non-incentivized measures of beliefs and attitudes. The typical justification is based on simplicity. This study seems to show otherwise.

If one person gives a euro to Ukraine, the result is €1.

If two people give 2 each, it is €4.

If 3,000 give 3,000 each, it is 9 million.

Let’s coordinate, here 👇

and please re-post to spread the word.

yourcontributionsquared.eu/en/

16th BESLAB Experimental Economics Summer School in Macroeconomics, June 16-22, 2025 16th BESLAB Experimental Economics Summer School in Macroeconomics

This is the summer school that got me interested in macroeconomics and finance. I highly recommend it.

And it is in Barcelona!

www.upf.edu/web/beslab/h...

I wonder if they would behave differently if there were some humans in the market. The common knowledge of rationality may be what's driving their outcome.

After a long wait, the working paper for the Many-Economists Project: The Sources of Researcher Variation in Economics. We had 146 teams perform the same research three times, each time with less freedom. What source of freedom leads to different choices and results? papers.ssrn.com/sol3/papers....

This is a very interesting result.

My opinion: RCTs remain one of the more robust methods for p-hacking because the results are more verifiable due to data availability, pre-registration, and simplicity of analyses. In contrast, IV, structural, and simulations are much more flexible for p-hacking.

The 2025 Annual Meeting of the Central Bank Research Association (CEBRA) will be co-organized with the Federal Reserve Bank of Boston and Harvard Business School

Deadline March 20!

Also a session organized by @suomenpankki.fi !

cebra.org/events/annua...

After being alerted about possible misconduct, the I4R are reproducing published papers that use data from a specific NGO (GDRI). This thread releases the first 2 reports and provides more information about the work and responses/statements from authors journals and journals. 🧵

I really like stacked bar charts for time series.

With companies debating return-to-office policies, Alessandra Fenizia @afenizia.bsky.social (GWU) examines productivity differences between remote and office work—using data from UK public sector workers.

Hosted by @talknormal.co.uk

🔊 Listen here: cepr.org/multimedia/d...

#EconSky

I always wanted to see the data on train delays. My experience with German trains has been so bad that I've begun to think I might be underestimating train delays in other countries. This data proves otherwise.