Why do people pay for useless advice?

Nattavudh Powdthavee and Yohanes Riyanto

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We investigated experimentally whether people can be induced to believe in a non-existent expert, and subsequently pay for what can only be described as transparently useless advice about future chance events. Consistent with the theoretical predictions made by Rabin (2002) and Rabin and Vayanos (2010), we show empirically that the answer is yes and that the size of the error made systematically by people is large.

Keywords: behavioral finance; hot-hand; random streak; expertise; information; wellbeing (search for similar items in EconPapers)
JEL-codes: C91 D00 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2012-06-28
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http://eprints.lse.ac.uk/121779/ Open access version. (application/pdf)

Related works:
Working Paper: Why Do People Pay for Useless Advice? (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:121779

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