Barron, Kai;
Huck, Steffen;
Jehiel, Philippe;
(2024)
Everyday Econometricians: Selection Neglect and Overoptimism When Learning from Others.
American Economic Journal: Microeconomics
, 16
(3)
pp. 162-198.
10.1257/mic.20200030.
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Abstract
This study explores selection neglect in an experimental investment game where individuals can learn from others’ outcomes. Experiment 1 examines aggregate-level equilibrium behavior. We fifind strong evidence of selection neglect and corroborate several comparative static predictions of Jehiel’s (2018) model, showing that the severity of the bias is aggravated by the sophistication of other individuals and moderated when information is more correlated across individuals. Experiment 2 focuses on individual decision-making, isolating the inflfluence of beliefs from possible confounding factors. This allows us to classify individuals according to their degree of naïvety and explore the limits of, and potential remedies for, selection neglect.
| Type: | Article |
|---|---|
| Title: | Everyday Econometricians: Selection Neglect and Overoptimism When Learning from Others |
| Open access status: | An open access version is available from UCL Discovery |
| DOI: | 10.1257/mic.20200030 |
| Publisher version: | https://doi.org/10.1257/mic.20200030 |
| Language: | English |
| Additional information: | This version is the author accepted manuscript. For information on re-use, please refer to the publisher's terms and conditions. |
| UCL classification: | UCL UCL > Provost and Vice Provost Offices > UCL SLASH UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics |
| URI: | https://discovery.ucl.ac.uk/id/eprint/10208007 |
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