Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/177285
Authors: 
Grevenbrock, Nils
Groneck, Max
Ludwig, Alexander
Zimper, Alexander
Year of Publication: 
2018
Series/Report no.: 
ZEW Discussion Papers 18-015
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
Document Type: 
Working Paper

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