Biased probability judgment: Evidence of incidence and relationship to economic outcomes from a representative sample
Journal
Journal of Economic Behavior & Organization
ISSN
0167-2681
ISSN-Digital
1879-1751
Type
journal article
Date Issued
2009-12-01
Author(s)
Dohmen, Thomas
;
Falk, Armin
;
Huffman, David
;
Marklein, Felix
;
Sunde, Uwe
Abstract
Many economic decisions involve a substantial amount of uncertainty, and therefore crucially depend on how individuals process probabilistic information. In this paper, we investigate the capability for probability judgment in a representative sample of the German population. Our
results show that almost a third of the respondents exhibits systematically biased perceptions of probability. The findings also indicate that the observed biases are related to individual economic outcomes, which suggests potential policy relevance of our findings.
results show that almost a third of the respondents exhibits systematically biased perceptions of probability. The findings also indicate that the observed biases are related to individual economic outcomes, which suggests potential policy relevance of our findings.
Language
English
Keywords
bounded rationality
probability judgment
gambler's fallacy
hot hand fallacy
representative design
long-term unemployment
financial decision making
HSG Classification
contribution to scientific community
Refereed
Yes
Publisher
Elsevier
Publisher place
Amsterdam
Volume
72
Number
3
Start page
903
End page
915
Pages
13
Subject(s)
Division(s)
Eprints ID
64784