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Cognition, optimism and the formation of age-dependent survival beliefs

Nils Grevenbrock, Max Groneck, Alexander Ludwig () and Alexander Zimper

No 200, SAFE Working Paper Series from Leibniz Institute for Financial Research SAFE

Abstract: This paper investigates the roles psychological biases play in deviations between subjective survival beliefs (SSBs) and objective survival probabilities (OSPs). We model deviations between SSBs and OSPs through age-dependent inverse S-shaped probability weighting functions. Our estimates suggest that implied measures for cognitive weakness and relative pessimism increase with age. We document that direct measures of cognitive weakness and motivational attitudes share these trends. Our regression analyses confirm that these factors play strong quantitative roles in the formation of subjective survival beliefs: cognitive weakness rather than optimism is an increasingly important contributor to overestimation of survival chances in old age.

Keywords: Subjective Survival Beliefs; Probability Weighting Function; Confirmatory Bias; Cognition; Optimism; Pessimism (search for similar items in EconPapers)
JEL-codes: D83 D91 I10 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-age, nep-cbe, nep-cis, nep-isf, nep-neu and nep-upt
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https://www.econstor.eu/bitstream/10419/203314/1/safe-wp-200_2.pdf (application/pdf)

Related works:
Working Paper: Cognition, Optimism and the Formation of Age-Dependent Survival Beliefs (2020) Downloads
Working Paper: Cognition, Optimism and the Formation of Age-Dependent Survival Beliefs (2020) Downloads
Working Paper: Cognition, Optimism and the Formation of Age-Dependent Survival Beliefs (2018) Downloads
Working Paper: Cognition, optimism and the formation of age-dependent survival beliefs (2018) Downloads
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