Experimental Evidence on Misguided Learning

Lorenz Götte and Marta Kozakiewicz

CRC TR 224 Discussion Paper Series from University of Bonn and University of Mannheim, Germany

Abstract: We test experimentally the theory of misguided learning formulated by Heidhues et al. (2018). The model predicts the behavior of an agent who has a biased perception of his ability and is learning about an unknown, decision-relevant parameter. We use a novel experimental design to demonstrate that the learning process of an overcon dent agent di ers signi cantly from that of an unbiased agent. In a dynamic setting, the overcon dent agent repeatedly takes suboptimal actions, misinterprets the output and forms erroneous beliefs about the unknown parameter. We provide the rst empirical evidence that giving a biased agent the opportunity to experiment and acquire new information is not only ine ective, but in some cases counterproductive.

Keywords: overcon dence; belief formation; learning; experiment (search for similar items in EconPapers)
JEL-codes: C91 D83 (search for similar items in EconPapers)
Pages: 38
Date: 2020-05
New Economics Papers: this item is included in nep-exp and nep-ore
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Citations: View citations in EconPapers (2)

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