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Perceiving prospects properly
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SYSNO ASEP 0468732 Document Type J - Journal Article R&D Document Type Journal Article Subsidiary J Článek ve WOS Title Perceiving prospects properly Author(s) Steiner, Jakub (NHU-N) RID
Stewart, C. (CA)Source Title American Economic Review - ISSN 0002-8282
Roč. 106, č. 7 (2016), s. 1601-1631Number of pages 31 s. Language eng - English Country US - United States Keywords evolution ; perception bias ; prospect theory Subject RIV AH - Economics Institutional support NHU-N - RVO:67985998 UT WOS 000379341800002 EID SCOPUS 84978818160 DOI 10.1257/aer.20141141 Annotation When an agent chooses between prospects, noise in information processing generates an effect akin to the winner's curse. Statistically unbiased perception systematically overvalues the chosen action because it fails to account for the possibility that noise is responsible for making the preferred action appear to be optimal. The optimal perception pattern exhibits a key feature of prospect theory, namely, overweighting of small probability events (and corresponding underweighting of high probability events). This bias arises to correct for the winner's curse effect. Workplace Economics Institute Contact Tomáš Pavela, pavela@cerge-ei.cz, Tel.: 224 005 122 Year of Publishing 2017
Number of the records: 1