Gender differences in investment reactions to irrelevant information

Maximilian Späth () and Daniel Goller
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Maximilian Späth: University of Potsdam

No 67, CEPA Discussion Papers from Center for Economic Policy Analysis

Abstract: Economic agents often irrationally base their decision-making on irrelevant information. This research analyzes whether men and women react to futile information about past outcomes. For this purpose, we run a laboratory experiment (Study 1) and use field data (Study 2). In both studies, the behavior of men is consistent with falsely assumed negative autocorrelation, often referred to as gambler’s fallacy Women’s behavior aligns with falsely assumed positive autocorrelation, a notion of the hot hand fallacy. On the aggregate, the two fallacies cancel out. Even when individuals are, on average, rational, the biases in the decision-making of subgroups might cause inefficient outcomes. In a mediation analysis, we find that a) the agents stated perceived probabilities of future outcomes are not blurred by irrelevant information and b) about 40 % of the observed biases are driven by differences in the perceived attractiveness of available choices caused by the irrelevant information.

Keywords: hot hand fallacy; gambler’s fallacy; gender; irrelevant information (search for similar items in EconPapers)
JEL-codes: C91 D81 J16 (search for similar items in EconPapers)
Date: 2023-09
New Economics Papers: this item is included in nep-exp, nep-gen and nep-ger
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Persistent link: https://EconPapers.repec.org/RePEc:pot:cepadp:67

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