Does self-relevance affect information processing? Experimental evidence on the response to performance and non-performance feedback

The results suggest that information processing differs significantly across self-relevant and self-irrelevant contexts, and that women may interpret positive feedback more conservatively than men, leading to more pessimistic posteriors.

Abstract

In many settings, individuals are confronted with decision problems that involve information relevant to their self-image. This paper uses an experiment to explore whether the selfrelevance of information influences information processing. The experiment implements two information processing tasks that are identical from a theoretical perspective, but differ in the type of information provided: performance feedback versus information within the context of a purely statistical updating problem. The results suggest that information processing differs significantly across self-relevant and self-irrelevant contexts. In the self-relevant context, except in cases where initial self-confidence is high, subjects overweigh unfavorable performance feedback, leading to overly pessimistic beliefs. This is in contrast to the corresponding self-irrelevant setup, where departures from Bayes ’ rule do not follow a consistent pattern in terms of direction, and are smaller in magnitude. In addition, I find that women may interpret positive feedback more conservatively than men, leading to more pessimistic posteriors. JEL Classification: C91; D83.