Many individuals have empathetic feelings towards animals but frequently consume meat. We investigate this "meat paradox" using insights from the literature on motivated reasoning in moral dilemmata. We develop a model where individuals form self-serving beliefs about the suffering of animals caused by meat consumption in order to alleviate the guilt associated with their dietary choices. The model predicts that the price of meat has a causal effect on individuals' beliefs: high prices foster realism by lowering the returns to self-deception, which magnify the price elasticity of meat consumption. The model also predicts a positive relationship between individuals' taste for meat and their propensity to engage in self-deception, a causal effect of aggregate consumption on individual beliefs, and the coexistence of equilibria of "collective realism" and "collective denial".

We study an experimentation problem in a situation where the outcomes depend on the decision-maker’s intrinsic ability and on an external variable. We analyze the mistakes made by individuals who hold inaccurate prior beliefs about their ability. Overconfident individuals take too much credit for their successes and excessively blame external factors if they fail. They are too easily dissatisfied with their environment, which leads them to experiment in variable environments and revise their self-confidence over time. In contrast, underconfident individuals might be trapped in low-quality environments and incur perpetual utility losses. (JEL D11, D83, D91)

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