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Everyday econometricians: Selection neglect and overoptimism when learning from others

Kai Barron, Steffen Huck and Philippe Jehiel

Discussion Papers, Research Unit: Economics of Change from WZB Berlin Social Science Center

Abstract: In this paper, we design an investment game which allows us to study the influence of selection when learning from others. Using the theoretical study of selection neglect in Jehiel (2018) as a guide, we test (i) for the presence of selection neglect in this investment context, and (ii) some comparative static predictions of the model. We find strong evidence for selection neglect—even though subjects are fully informed about the data generating process. As theoretically predicted, the degree of bias due to selection neglect increases when other decision makers become more informed, or become more rational. It decreases when signals are correlated.

Keywords: selection neglect; beliefs; overconfidence; experiment; survivorship bias; bounded rationality (search for similar items in EconPapers)
JEL-codes: C11 C90 D80 D83 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-cbe, nep-exp, nep-gth and nep-hpe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (33)

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https://www.econstor.eu/bitstream/10419/193681/1/B ... SelectionNeglect.pdf (application/pdf)

Related works:
Working Paper: Everyday econometricians: Selection neglect and overoptimism when learning from others (2023) Downloads
Working Paper: Everyday econometricians: Selection neglect and overoptimism when learning from others (2023) Downloads
Working Paper: Everyday econometricians: Selection neglect and overoptimism when learning from others (2022) Downloads
Working Paper: Everyday econometricians: Selection neglect and overoptimism when learning from others (2022) Downloads
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