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A recent Miami Herarld article on some academic research on bias is quite illuminating. Because it's a registration required link (ugh) I'll snip the best parts.
Drew Westen is a professor of psychology at Emory University, and author of a new and still-unpublished study testing whether people make decisions based on bias or fact. Bias won hands down.

In a key scenario, respondents were lead to believe a soldier was accused of torturing people at Abu Ghraib prison in Iraq. The fictional soldier claimed to have been following orders from superiors who told him the Geneva Convention had been suspended. He supposedly wanted to subpoena President Bush and Defense Secretary Donald Rumsfeld to prove his case. Respondents were asked if he should have that right.

Some were presented with strong ''evidence'' corroborating the soldier's story. Others had only his word to go on.

But the strength or weakness of the evidence turned out to be immaterial. Researchers were able to predict people's opinion over 80 percent of the time based simply on their opinions of the Bush administration, the GOP, the military and human rights groups. Those who had less affection for the president sided with the soldier even when the evidence was weak. And fans of the president tended to side with him even when the evidence was overwhelming.

We believe what we want, facts be damned.

''The scary thing,'' says Westen, ``is the extent to which you can imagine this influencing jury decisions, boardroom decisions, political decisions . . .''
It sounds like solid research and I believe it. But I'm not so pessimistic on the conclusion. Instead of bias, I would just say we are all Bayesians. We see things through a filter, but that allows us to process information faster and more efficiently. Sure, sometimes our preconceptions are mistaken and unhelpful, but generally we apply preconceptions every day to social and logistical problems big and small.

If you told me that someone I generally find unreliable or mistaken in his worldview (for me, Michael Moore or Ralph Nader), who believed X, you would have to add a lot of data clearly pointing to X in order for me to also believe X. In contrast, If you told me that Milton Friedman or Richard Posner believed Y, I could probably withstand seeing some data suggesting not-Y and still believe Y, based on my faith in Friedman or Posner. In a more pedestrian fashion, when my wife says my shirt doesn't match, I believe her without checking myself, but if she told me my spark plugs needed changing, I would pretty much ignore her. People and groups have credibility on different issues, and their alignment with certain positions causes me to have greater or lesser belief in those positions irrespective of the data. Those starting points then require more or less corroborating data depending on my initial skepticism.

I remember Fama and French's influential Journal of Finance 1992 article showing little evidence for the CAPM. It was so persuasive because the authors were and are efficient markets advocates, and CAPM is aligned with the efficient markets camp. Their conclusion against the CAPM suggested the data must have been very weak indeed. If that article was written by an unknown, or some 'animal spirits' advocate at Harvard it would not have been nearly as persuasive. That's bias, but that's also rational.
Mahalanobis meinte am 10. Jan, 11:18:
Biased Bayesians and bandpass filters
Especially when it comes down to such issues as the war in Iraq it seems that people have fallen in love with their priors and don't take the updating-business too serious. Put differently: We often see things through a filter that discriminates against signals at certain frequencies. (An absolutely rational strategy if you life in Europe and mind being invited to parties... Truth-seeking and utility maximization do not always go hand in hand... ;-D).

[But generally, I agree with you] 
HedgeFundGuy antwortete am 10. Jan, 15:28:
that's why it's just as important to have good 'priors'. Choose them carefully. :> 
Andrew Gelman meinte am 2. Feb, 23:50:
skeptical about your skepticism
Hey--this is an interesting research tidbit as well as an interesting discussion on your part. (And lots of other interesting stuff on the blog!) In this example, however, I think you're a bit too optimistic about Bayesian adjusting. These psych expts are typically designed carefully enough that they can show that the results are, in fact, inconsistent with _any_ prior distribution. Even if this particular study did not do this, there's a lot of evidence that people overweight base-rate info or underweight it, but rarely do they really do things Bayesianly.

You can see http://www.stat.columbia.edu/~cook/movabletype/archives/2005/02/using_base_rate.html
for my full discussion.

Andrew 
HedgeFundGuy antwortete am 3. Feb, 02:08:
I suppose you are right, in the sense that there are many scenarios where people underweight priors inappropriately. But I think those situations happen to be more contrived, hypothetical, the kind of 'gotcha' a physc professor would document. I would guess that in most situations, relating to politics or social norms, we marginally update a strong prior belief. 
Andrew Gelman meinte am 3. Feb, 16:30:
That's possible, but maybe these inferences are more likely to be ok in business (where there is feedback that, I (naively?) imagine, is often rapid and often quantitative) but not so reasonable for political opinions, where there's feedback is often delayed, and there's often no direct consequence to being wrong.