In three sets of experiments involving over 4,200 subjects, we show that agents motivated to be selfish make systematic decision errors of the kind generally attributed to cognitive limitations or behavioral biases. We show that these decision errors are eliminated (or dramatically reduced) when self-serving motives are removed. We say that individuals make "motivated errors." They make decision errors, but only when it is self-serving to do so.
Research support was provided by the Wharton School of the University of Pennsylvania and Harvard Business School. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.