Humans show a natural tendency to discount bad news while incorporating good news into beliefs (the "good news-bad news effect"), an effect that may help explain seemingly irrational risk taking. Understanding how this bias develops with age is important because adolescents are prone to engage in risky behavior; thus, educating them about danger is crucial. We reveal a striking valence-dependent asymmetry in how belief updating develops with age. In the ages tested (9-26 y), younger age was associated with inaccurate updating of beliefs in response to undesirable information regarding vulnerability. In contrast, the ability to update beliefs accurately in response to desirable information remained relatively stable with age. This asymmetry was mediated by adequate computational use of positive but not negative estimation errors to alter beliefs. The results are important for understanding how belief formation develops and might help explain why adolescents do not respond adequately to warnings.