A growing body of evidence suggests that people exhibit large biases when processing information about themselves, but less is known about the underlying inference process. This paper studies belief updating patterns regarding academic ability in a large sample of students transitioning from...

In a simple continuous-time model where the learning process affects the willingness to hold liquidity, we provide an intuitive explanation of business cycle asymmetry and post-crisis slow recovery. When observing a liquidity shock, individuals rationally increase their subjective probability of...

A growing body of evidence suggests that people exhibit large biases when processing information about themselves, but less is known about the underlying inference process. This paper studies belief updating patterns regarding academic ability in a large sample of students transitioning from...