Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/124912
Authors: 
Antoniou, Constantinos
Harrison, Glenn
Lau, Morten
Read, Daniel
Year of Publication: 
2015
Series/Report no.: 
IZA Discussion Papers 9387
Abstract: 
We design an experiment to test the hypothesis that, in violation of Bayes Rule, some people respond more forcefully to the strength of information than to its weight. We provide incentives to motivate effort, use naturally occurring information, and control for risk attitude. We find that the strength-weight bias affects expectations, but that its magnitude is significantly lower than originally reported. Controls for non-linear utility further reduce the bias. Our results suggest that incentive compatibility and controls for risk attitude considerably affect inferences on errors in expectations.
Subjects: 
behavioral biases
market efficiency
experimental finance
JEL: 
D81
D84
G11
Document Type: 
Working Paper

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