Learning About One's Self

Abstract

To understand why naivete about present-biased behavior is so prevalent and persistent, our experiment investigates how well participants learn from their past behavior in a real-effort task. While participants display naive present-biased behavior initially, our novel methodology allows us to establish that their updating is unbiased and would eliminate naivete in the long run. Moreover, learning is unencumbered by a change in the environment. Our results suggest that persistent naivete does not result from a fundamental inferential bias. However, participants underestimate their future learning - a bias that may lead to underinvestment in experimentation and a failure to activate self-regulation mechanisms.