The Price of Luck

Sílvia Bou () and Magda Cayón ()
Additional contact information
Sílvia Bou: Universitat Autónoma de Barcelona
Magda Cayón: Universitat Autónoma de Barcelona

No 1304, Working Papers from Departament Empresa, Universitat Autònoma de Barcelona

Abstract: We find that the vast majority of students taking an advanced undergraduate finance course show a preference for luck in a classroom experiment. In Phase I of the experiment part of the students, group A, were asked to guess a coin toss five times in a row. In Phase II the rest of the students, group B, were given 10 EUR to bet on some of the Group A students taking a second go at guessing a sequence of five coin tosses (Phase III). Group B students’ bets were by default allocated to the worse performing student in Phase I. Switching to better performing Group A students was costly. A total of 23 out of 28 students were willing to pay for sw itching and thus showed a preference for luck.

Keywords: Decision heuristics; hot hand fallacy; experiments. (search for similar items in EconPapers)
JEL-codes: C90 G02 G11 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2013-06, Revised 2013-06
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published in Working Papers at the Department of Business, December pages 1-26

Downloads: (external link)
http://www.uab.cat/doc/DOC_WP_13_04 Revised version, 2013 (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 No Encontrado (http://www.uab.cat/doc/DOC_WP_13_04 [301 Moved Permanently]--> https://www.uab.cat/doc/DOC_WP_13_04)

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: https://EconPapers.repec.org/RePEc:bbe:wpaper:1304

Access Statistics for this paper

More papers in Working Papers from Departament Empresa, Universitat Autònoma de Barcelona
Bibliographic data for series maintained by Departament Empresa ().