|dc.description.abstract||This thesis contains four chapters presenting theory and empirical evidence for
two distinct aspects of human behaviour: social learning and motivated beliefs.
I develop a simple theory to revisit the classical social learning models by challenging
the assumption of freely available information. My model suggests that when
it is costly to acquire information, social learning (herding) is prevalent, and people
do not have incentives to acquire private information (e.g. to form their own
judgements). Classical information cascade models suggest that although herding
is observed, information aggregation is still possible with communication channels
(e.g. a survey); however, my model indicates that information aggregation
is unattainable because people in the herd do not acquire private information.
We then test my model in a laboratory and find that, as predicted, subjects
can learn from others successfully. Also, individual heterogeneity exists in: there
are herd animals biased against private information, lone wolves who are biased
toward it and subjects who behave optimally. In aggregate, there is no overall
bias for or against private information. We also document a new cognitive bias
involved in processing social information. Individual characteristics, especially
the cognitive ability, seems to be a very good indicator of subjects' behaviour.
Subjects with higher cognitive scores choose optimal information more frequently
and follow information more frequently.
Overconfidence can be driven by the consumption motive (e.g. savouring future
payoff/self-image) and the instrumental motive (e.g. being optimistic about the
outcome of effort for motivation). I develop a simple model incorporating these
two motives and suggest that individuals hold a dynamic pattern of overconfidence.
Then I conduct an online field experiment with students to test the theory. The
experimental findings indicate that students are likely to adopt overconfident
beliefs as a commitment device to deal with their self-control problem. However,
I do not find evidence for the consumption motive of overconfidence.||en