Gossner, Olivier and Steiner, Jakub (2018) On the cost of misperception: general results and behavioural applications. Journal of Economic Theory, 177. pp. 816-847. ISSN 0022-0531
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Abstract
In a choice model, we characterize the loss induced by misperceptions of payoff-relevant parameters across a distribution of decision problems. When the agent cannot avoid misperceptions but has some control over the distribution of errors, we show that strategies that minimize loss from misperception exhibit systematic biases, akin to some documented in the behavioural and psychological literatures. We include illusion of control, order effect, overprecision, and overweighting of small probabilities as illustrative examples.
| Item Type: | Article |
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| Official URL: | https://www.sciencedirect.com/journal/journal-of-e... |
| Additional Information: | © 2018 Elsevier Inc. |
| Divisions: | Mathematics |
| Subjects: | H Social Sciences > HB Economic Theory Q Science > QA Mathematics |
| Date Deposited: | 13 Aug 2018 14:40 |
| Last Modified: | 21 Jan 2024 02:03 |
| Projects: | ANR-11-IDEX-0003/LabEx Ecodec/ANR-11-LABX-0047, 16-00703S, 770652 |
| Funders: | French National Research Agency, Czech Academy of Sciences, GACR, European Research Council |
| URI: | http://eprints.lse.ac.uk/id/eprint/89837 |
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