Biased Probability Judgment: Representative Evidence for Pervasiveness and Economic Outcomes
Series
SCALA
Type
discussion paper
Date Issued
2008-12-01
Author(s)
Sunde, Uwe
;
Dohmen, Thomas
;
Falk, Armin
;
Huffman, David
;
Marklein, Felix
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 observed outcomes, which indicates the 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 practical use / society
Refereed
Yes
Publisher
St.Gallen Research Centre for Ageing, Welfare and Labour Market Analysis (SCALA)
Publisher place
St.Gallen
Number
2008
Start page
28
Subject(s)
Division(s)
Eprints ID
71762