Introduction

Throughout the last several years, the cry of political bias has been directed at the news media from nearly all quarters. Interestingly, though, one hears very different accusations from each quarter. In particular, when asked, a majority of political conservatives accuse the network news and major newspapers of a deep liberal bias. However, when one questions the most politically liberal, they claim that the same media display a conservative bias. If we consider both groups of people to be sincere, it appears that they have come to exactly opposite conclusions while viewing the exact same information. In fact, because of the supposed bias, many have chosen to obtain their news primarily from cable news outlets that seem much more open about their bent. Thus, more-conservative people tend to view more-conservative networks, and more-liberal people tend to view more-liberal networks. Here they may view news that generally confirms their already-held beliefs and are unlikely to encounter news that would cause them to question or abandon these beliefs. What drives people to these havens of safe information?

Other interesting behavior can be seen on the part of entrepreneurs. Entrepreneurs take great financial risks on the bet that their business idea will produce a successful venture. More often than not, however, these ventures fail, leaving in their wake lost dreams, lost money, and often lost marriages. Even those founding successful businesses tend to put in greater amounts of work for less money than they would make in alternative employment. Given the overwhelming prevalence of failure, why would any rational person take such risks? Moreover, among well-established firms, we often see waves of mergers. One firm buys another, hoping that the two pieces together will provide a greater profit than they do separately. If the firms perform some set of overlapping functions, it is possible to eliminate the redundant portions, thus reducing costs, and obtain the same revenues. However, this is not how it generally works out. In fact, the overwhelming majority of mergers lead to lower profits for the purchasing firm. What would lead firms to systematically misjudge the benefits of such mergers?

This chapter builds on the previous chapter in exploring the ways people seek new information and how this systematically affects beliefs and subsequent actions. In searching for new information, we often have a choice as to what type of information we will see. For example, we can choose to consume news with a conservative spin or with a liberal spin. One might have a greater tendency to confirm our currently held beliefs, and others might tend to disconfirm our currently held beliefs. In making decisions under uncertainty, we often must grapple with conflicting information and choices between information sources. Our choice affects the accuracy of our perceptions and the success of our decisions.