Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/175191 
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Title: 

Cognition, optimism and the formation of age-dependent survival beliefs

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Year of Publication: 
2018
Series/Report no.: 
SAFE Working Paper No. 200
Publisher: 
Goethe University Frankfurt, SAFE - Sustainable Architecture for Finance in Europe, Frankfurt a. M.
Abstract: 
This paper investigates the roles psychological biases play in empirically estimated deviations between subjective survival beliefs (SSBs) and objective survival probabilities (OSPs). We model deviations between SSBs and OSPs through age-dependent inverse S-shaped probability weighting functions (PWFs), as documented in experimental prospect theory. Our estimates suggest that the implied measures for cognitive weakness, likelihood insensitivity, and those for motivational biases, relative pessimism, increase with age. We document that direct measures of cognitive weakness and motivational attitudes share these trends. Our regression analyses confirm that these factors play strong quantitative roles in the formation of subjective survival beliefs. In particular, cognitive weakness is an increasingly important contributor to the overestimation of survival chances in old age.
Subjects: 
Subjective Survival Beliefs
Probability Weighting Function
Confirmatory Bias
Cognition
Optimism
JEL: 
D12
D83
I10
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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The document was removed on behalf of the author(s)/ the editor(s) on: September 16, 2019


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