Memory Overload and Asymmetric Underreaction

We show that greater memory overload results in a disproportionately greater underreaction to belief-challenging information compared to belief-confirming information. In an experiment, we keep constant the information subjects receive but vary the difficulty of memorizing the signals. In the treatment condition, the preceding signal disappears as the next signal appears; in the control condition, the preceding signal remains visible. Memory load is therefore greater in the treatment than in the control condition. We find that in the treatment condition, subjects underreact more to belief-challenging information than in the control condition, but updating to belief-confirming information is not significantly affected. Our results caution against information campaigns that ignore the roles of memory load and attention.