The price of luck: paying for the hot hand of others

Silvia Bou, Jordi Brandts, Magda Cayón and Pablo Guillen
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Silvia Bou: Universitat Autònoma de Barcelona
Magda Cayón: Universitat Autònoma de Barcelona

Journal of the Economic Science Association, 2016, vol. 2, issue 1, No 6, 60-72

Abstract: Abstract We report on the results of an experiment with a statistical choice task involving the toss of a fair coin. In our experiment, participants had to decide whether they were willing to pay a price to switch from betting on the future performance of one player to betting on that of another player. The switch was from a player who had been previously less successful in betting on five coin flips to another one who had been more successful in the same task. We conducted a treatment with the Becker–DeGroot–Marschak mechanism and one in which participants were faced with a fixed price. In both cases, participants exhibit a strong bias towards placing their bets on players with a good guessing history in the coin toss task. Participants’ behaviour is compatible with prescriptive luck beliefs, that is, the idea that luck is a somehow deterministic and personal attribute.

Keywords: Decision heuristics; Cognitive bias; Economic experiments (search for similar items in EconPapers)
JEL-codes: C91 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (3)

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DOI: 10.1007/s40881-016-0023-9

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