The Non-Use of Bayes Rule: Representative Evidence on Bounded Rationality

Thomas Dohmen (), Armin Falk (), David Huffman (), Felix Marklein and Uwe Sunde ()
Authors registered in the RePEc Author Service: David Jaeger ()

No 1, Research Memoranda from Maastricht : ROA, Research Centre for Education and the Labour Market

Abstract: The ability to process new information and to compute conditional probabilities iscrucial for making appropriate decisions under uncertainty. In this paper, weinvestigate the capability of inferring conditional probabilities in a representativesample of the German population. Our results show that only a small fraction ofthe population responds consistently with Bayes'' rule. Instead, most individualseither neglect the base probability, or the arrival of new information, in theirresponses. The probability to give normatively correct answers decreases with thelevel of education.

Keywords: labour market entry and occupational careers (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe and nep-mig
Date: 2009

Downloads: (external link)
http://edocs.ub.unimaas.nl/loader/file.asp?id=1383 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:dgr:umaror:2009001

Access Statistics for this paper

More papers in Research Memoranda from Maastricht : ROA, Research Centre for Education and the Labour Market
Series data maintained by Willy Villevoye ().