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Title:Biased probability judgment: evidence of incidence and relationship to economic outcomes from a representative sample PDF Logo
Authors:Dohmen, Thomas
Falk, Armin
Huffman, David
Marklein, Felix
Sunde, Uwe
Issue Date:2009
Series/Report no.:IZA discussion papers 4170
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.
Subjects:Bounded rationality
probability judgment
gambler's fallacy
hot hand fallacy
representative design
long-term unemployment
financial decision making
JEL:C90
D00
D10
D80
D81
H00
Persistent Identifier of the first edition:urn:nbn:de:101:1-2009060824
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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