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

[journal article]

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

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Please use the following Persistent Identifier (PID) to cite this document:http://nbn-resolving.de/urn:nbn:de:0168-ssoar-314229

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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.
Classification Methods and Techniques of Data Collection and Data Analysis, Statistical Methods, Computer Methods; Applied Psychology
Free Keywords Bounded Rationality; Probability Judgment; Gambler's Fallacy; Hot Hand Fallacy; Representative Design; Long-Term Unemployment; Financial Decision Making
Document language English
Publication Year 2009
Page/Pages p. 903-915
Journal Journal of Economic Behavior & Organization, 72 (2009) 3
DOI http://dx.doi.org/10.1016/j.jebo.2009.07.014
Status Postprint; peer reviewed
Licence PEER Licence Agreement (applicable only to documents from PEER project)