Biased probability judgment: Evidence of incidence and relationship to economic outcomes from a representative sample

Thomas Dohmen, Armin Falk, David Huffman, Felix Marklein and Uwe Sunde

Journal of Economic Behavior & Organization, 2009, vol. 72, issue 3, 903-915

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.

Keywords: Bounded; rationality; Probability; judgment; Gambler's; fallacy; Hot; hand; fallacy; Representative; design; Long-term; unemployment; Financial; decision; making (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (48)

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Related works:
Working Paper: Biased Probability Judgment: Evidence of Incidence and Relationship to Economic Outcomes From a Representative Sample (2009)
Working Paper: Biased Probability Judgment: Evidence of Incidence and Relationship to Economic Outcomes from a Representative Sample (2009)
Working Paper: Biased probability judgment: Evidence of incidence and relationship to economic outcomes from a representative sample (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:72:y:2009:i:3:p:903-915

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