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Abstract
People are often exposed to multiple narratives or models that interpret the same observation, many of which may conflict. At the same time, people usually hold intrinsic preferences about the states of the world. Motivated reasoning suggests that people distort how they process information in the direction of beliefs they find attractive. In this paper, I aim to first understand how people form and update their beliefs when exposed to competing models. Furthermore, I aim to explore, both theoretically and experimentally, how agents’ preferences for certain world states influence their model selection and belief updating process in the presence of competing models. I connect motivated reasoning to the model selection framework and derive conditions under which agents’ preferences may lead them to switch models or adjust model weights.