Optimal mental health belief formation with information avoidance: A decision-theoretic model

Mental health stigma hinders access to healthcare by distorting belief formation and decision-making. Stigmatized individuals often underestimate their risk of mental illness and avoid diagnostic information. This study develops a decision-theoretic model that formalizes how stigma reinforces identity-congruent actions, driving belief distortion and information avoidance. By integrating insights from information preference theory and identity utility, the model explains why individuals with strong stigma-driven identity concerns are prone to optimistic bias and resist diagnostic tests to protect their self-concept. The study contributes to the literature in three key ways. First, it conceptually extends economic theory by endogenizing belief distortion, identity-congruent action, and information avoidance within a unified decision-making structure. By introducing stigma as a formally modeled individual-specific parameter - previously underexplored in economics - the framework improves our ability to capture heterogeneity in health-related decision-making and strengthens the theoretical bridge between economic modeling and clinical mental health research. Second, it provides a theoretical framework linking clinical phenomena such as denial, delayed treatment-seeking, and treatment discontinuation within a formal decision-theoretic model. Third, it offers a structured foundation for experimental and empirical research by demonstrating how stigma, a quantifiable construct, systematically influences decision-making through identity-driven actions and belief distortion.