Everyday Econometricians: Selection Neglect and Overoptimism When Learning from Others

Kai Barron, Steffen Huck and Philippe Jehiel ()

American Economic Journal: Microeconomics, 2024, vol. 16, issue 3, 162-98

Abstract: This study explores selection neglect in an experimental investment game where individuals can learn from others' outcomes. Experiment 1 examines aggregate-level equilibrium behavior. We find strong evidence of selection neglect and corroborate several comparative static predictions of Jehiel's (2018) model, showing that the severity of the bias is aggravated by the sophistication of other individuals and moderated when information is more correlated across individuals. Experiment 2 focuses on individual decision-making, isolating the influence of beliefs from possible confounding factors. This allows us to classify individuals according to their degree of naivety and explore the limits of, and potential remedies for, selection neglect.

JEL-codes: C91 D12 D83 D91 G41 (search for similar items in EconPapers)
Date: 2024
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Related works:
Working Paper: Everyday Econometricians: Selection Neglect and Overoptimism When Learning from Others (2024)
Working Paper: Everyday Econometricians: Selection Neglect and Overoptimism When Learning from Others (2024)
Working Paper: Everyday econometricians: Selection neglect and overoptimism when learning from others (2023)
Working Paper: Everyday econometricians: Selection neglect and overoptimism when learning from others (2023)
Working Paper: Everyday econometricians: Selection neglect and overoptimism when learning from others (2022)
Working Paper: Everyday econometricians: Selection neglect and overoptimism when learning from others (2022)
Working Paper: Everyday econometricians: Selection neglect and overoptimism when learning from others (2019)
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DOI: 10.1257/mic.20200030

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