Contingent Belief Updating

(joint with C. Aina, K. Brütt)

We study the impact of contingent thinking on belief updating. Engaging in contingent thinking calls for both processing hypothetical information and contrasting multiple contingencies during the belief-updating process. Our experimental findings show that contingent thinking leads to significant deviations from Bayesian updating. These deviations arise from the diminished perceived informativeness of hypothetical signals and the challenges posed by asymmetric signals, where comparing contingencies becomes more difficult. These results have implications for contingent planning, information acquisition, and information design.