ABSTRACT

Confirmation Bias, put most simply, is the tendency people have to look for evidence that confirms what they already believe. There are several definitions of Confirmation Bias because the bias is evident in several distinct but linked forms. The other forms of Confirmation Bias involve differential treatment of evidence. Hirshleifer notes evidence that “individuals more subject to this Confirmation Bias lose money in an experimental market to those who are less subject to it,” so it is certainly worth the effort. An experiment has been run to investigate what biases might be apparent in assessment of the profitability of a company. There are new sub-optimal non-Bayesian-updating agents born every minute, to coin a phrase. Some of them continue in sub-optimal behaviour because human biases are often ineradicable. Some authors have concluded that Hindsight Bias is behind the persistence of some markets such as those for some mutual funds which continue to exist even though they generally lose money for investors.