EconPapers    
Economics at your fingertips  
 

Probability Judgements in Multi-Stage Problems: Experimental Evidence of Systematic Biases

Uri Gneezy

No 1996-01, Discussion Paper from Tilburg University, Center for Economic Research

Abstract: We report empirical evidence that in problems of random walk with positive drift, bounded rationality leads individuals to under-estimate the probability of success in the long run.In particular, individuals who were given the stage by stage probability distribution failed to aggregate this information in a multi-stage case.Estimations of the long run probability distribution did not differ much from the given stage-by-stage probability distribution, and were systematically lower than the accurate one.Applications to risk perception in financial markets are considered

Keywords: bounded rationality; Probability; random walks; Estimation (search for similar items in EconPapers)
Date: 1996
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12) Track citations by RSS feed

Downloads: (external link)
https://pure.uvt.nl/ws/portalfiles/portal/522950/1.pdf (application/pdf)

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:tiu:tiucen:e4424aaf-139b-44a5-8561-4cd08baa0a9a

Access Statistics for this paper

More papers in Discussion Paper from Tilburg University, Center for Economic Research
Bibliographic data for series maintained by Richard Broekman ().

 
Page updated 2019-08-20
Handle: RePEc:tiu:tiucen:e4424aaf-139b-44a5-8561-4cd08baa0a9a