A Practical Guide to Updating Beliefs From Contradictory Evidence. Issue 1 (15th January 2021)

• Record Type: Journal Article
• Authors: Sadler, Evan
• Is Part Of: Econometrica. Volume 89:Issue 1(2021)
• Page Start: 415
• Page End: 436
• Publication Date: 2021-01-15
• Subjects: Falsehoods -- bounded rationality -- contradictory claims -- small worlds; Econometrics -- Periodicals; Economics, Mathematical -- Periodicals; Economics -- Periodicals; Économétrie -- Périodiques; Mathématiques économiques -- Périodiques; Économie politique -- Périodiques; 330.05
• DOI: 10.3982/ECTA17378
• Languages: English
• ISSNs: 0012-9682

Abstract

Abstract : We often make high stakes choices based on complex information that we have no way to verify. Careful Bayesian reasoning—assessing every reason why a claim could be false or misleading—is not feasible, so we necessarily act on faith: we trust certain sources and treat claims as if they were direct observations of payoff relevant events. This creates a challenge when trusted sources conflict: Practically speaking, is there a principled way to update beliefs in response to contradictory claims? I propose a model of belief formation along with several updating axioms. An impossibility theorem shows there is no obvious best answer, while a representation theorem delineates the boundary of what is possible.