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Biased probability judgment: evidence of incidence and relationship to economic outcomes from a representative sample


Dohmen, Thomas; Falk, Armin; Huffman, David; Marklein, Felix; Sunde, Uwe


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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.
Klassifikation Erhebungstechniken und Analysetechniken der Sozialwissenschaften; angewandte Psychologie
Freie Schlagwörter Bounded Rationality; Probability Judgment; Gambler's Fallacy; Hot Hand Fallacy; Representative Design; Long-Term Unemployment; Financial Decision Making
Sprache Dokument Englisch
Publikationsjahr 2009
Seitenangabe S. 903-915
Zeitschriftentitel Journal of Economic Behavior & Organization, 72 (2009) 3
DOI http://dx.doi.org/10.1016/j.jebo.2009.07.014
Status Postprint; begutachtet (peer reviewed)
Lizenz PEER Licence Agreement (applicable only to documents from PEER project)