Behavioral Attenuation

Benjamin Enke, Thomas Graeber, Ryan Oprea and Jeffrey Yang

No 32973, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We report a large-scale examination of behavioral attenuation: due to information-processing constraints, the elasticity of people’s decisions to fundamentals is generally too small. We implement 30 experiments on a broad range of economic decisions, including choice, valuation, belief formation, strategic games and generic optimization. In 93% of our experiments, the elasticity of decisions to fundamentals decreases in participants’ cognitive uncertainty. Moreover, in decision problems with objective solutions, elasticities are universally smaller than is optimal. We show that the magnitude of attenuation is partly driven by the complexity of the decision problem. Many widely-studied anomalies represent special cases of behavioral attenuation.

JEL-codes: D03 (search for similar items in EconPapers)
Date: 2024-09
New Economics Papers: this item is included in nep-evo, nep-exp and nep-neu
Note: LE LS PE POL
References: Add references at CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www.nber.org/papers/w32973.pdf (application/pdf)
Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:32973

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w32973
The price is Paper copy available by mail.

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().