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Unrealistic Optimism about Exogenous Events: An Experimental Test

Astri Muren ()

No 2004:1, Research Papers in Economics from Stockholm University, Department of Economics

Abstract: An experiment is designed to test if individuals show (unrealistic) optimism when determining their subjective probabilities about exogenous circumstances. Subjects in the control group make an informed guess about a number, under a payment scheme that rewards close guesses. In the treatment group, subjects' payments depend on the actual number as well as on the closeness of the guess, and they are thus given an incentive to guess optimistically. The data suggests that there is an optimistic bias.

Keywords: optimism; unrealistic optimism; wishful thinking; wish fulfilment. (search for similar items in EconPapers)
JEL-codes: C91 D81 D84 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2004-03-22
New Economics Papers: this item is included in nep-ent, nep-exp and nep-mic
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