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Advanced Counter-Biasing

Jeffrey P. Carpenter () and Kevin Benscheidt
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Jeffrey P. Carpenter: Middlebury College
Kevin Benscheidt: Middlebury College

No 12253, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Viewed through the lens of the prominent two-system model of decision making, behavioral economics is seen as studying the tension between impulses (System 1) and rationality (System 2). In this context, two strategies, "de-biasing" informing agents of their biases and "counter-biasing" using "nudges" to activate biases to positively influence choice, have improved the welfare of behavioral agents. We advance the notion of counter-biasing by demonstrating that one bias (present bias) can be pit against another (choking at high stakes) to counteract the ill effects of the second. Our results demonstrate the potential of counter-biasing as an effective policy tool.

Keywords: behavioral economics; counter-biasing; present bias; choking; experiment (search for similar items in EconPapers)
JEL-codes: C91 D91 M52 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2019-03
New Economics Papers: this item is included in nep-cbe
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