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|Title:||Cognitive abilities and behavioral biases |
Schmitz, Patrick W.
|Issue Date:||2008 |
|Series/Report no.:||IZA Discussion Papers 3481|
|Abstract:||We use a simple, three-item test for cognitive abilities to investigate whether established behavioral biases that play a prominent role in behavioral economics and finance are related to cognitive abilities. We find that higher test scores on the Cognitive Reflection Test of Frederick (2005) indeed are correlated with lower incidences of the conjunction fallacy, conservatism in updating probabilities, and overconfidence. Test scores are also significantly related to subjects' time and risk preferences. We find no influence on anchoring. However, even if biases are lower for people with higher cognitive abilities, they still remain substantial.|
cognitive reflection test
|Persistent Identifier of the first edition:||urn:nbn:de:101:1-2008052718|
|Document Type:||Working Paper|
|Appears in Collections:||IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)|
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