Biased probability judgment: Evidence of incidence and relationship to economic outcomes from a representative sample

T.J. Dohmen, A. Falk, D. Huffman, F. Marklein, U. Sunde

Research output: Contribution to journalArticleAcademicpeer-review

Abstract

Many economic decisions involve a substantial amount of uncertainty, and therefore crucially depend on how individuals process probabilistic information. In this paper, we investigate the capability for probability judgment in a representative sample of the german population. Our results show that almost a third of the respondents exhibits systematically biased perceptions of probability. The findings also indicate that the observed biases are related to individual economic outcomes, which suggests potential policy relevance of our findings.
Original languageEnglish
Pages (from-to)903-915
Number of pages13
JournalJournal of Economic Behavior & Organization
Volume72
DOIs
Publication statusPublished - 1 Jan 2009

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