Bribing the self Abstract   Expert advice is often biased in ways that benefit the advisor. We demonstrate how selfdeception helps advisors be biased while preserving their selfimage as ethical and identify limits to advisorsu0027 ability to selfdeceive. In experiments where advisors recommend one of two investments to a client and receive a commission that depends on their recommendation, we vary the timing at which advisors learn about their own incentives. When advisors learn about their incentives before evaluating the available investments, they are more likely to be biased than when they learn about their incentives only after privately evaluating the investments. Consistent with selfdeception, learning about the incentive before evaluating the options affects advisorsu0027 beliefs and preferences over the investments. Biased advice persists with minimal justifications but is eliminated when all justifications are removed. These findings show how selfdeception can be constrained to improve advice provision.

Selfconfidence and unraveling in matching markets We document experimentally how biased selfassessments affect the outcome of matching markets. In the experiments, we exogenously manipulate the selfconfidence of participants regarding their relative performance by employing hard and easy realeffort tasks. We give participants the option to accept early offers when information about their performance has not been revealed, or to wait for the assortative matching based on their actual relative performance. Early offers are accepted more often when the task is hard than when it is easy. We show that the treatment effect works through a shift in beliefs,i.e., underconfident agents are more likely to accept early offers than overconfident agents. The experiment identifies a behavioral determinant of unraveling, namely biased selfassessments, which can lead to penalties for underconfident individuals as well as efficiency losses.