Unrealistic Optimism about Exogenous Events: An Experimental Test
AbstractAn experiment is designed to test if individuals show (unrealistic) optimism when determining their subjective probabilities about exogenous circumstances. Subjects in the control group make an informed guess about a number, under a payment scheme that rewards close guesses. In the treatment group, subjects' payments depend on the actual number as well as on the closeness of the guess, and they are thus given an incentive to guess optimistically. The data suggests that there is an optimistic bias.
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Bibliographic InfoPaper provided by Stockholm University, Department of Economics in its series Research Papers in Economics with number 2004:1.
Length: 20 pages
Date of creation: 22 Mar 2004
Date of revision:
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optimism; unrealistic optimism; wishful thinking; wish fulfilment.;
Find related papers by JEL classification:
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-03-28 (All new papers)
- NEP-ENT-2004-03-28 (Entrepreneurship)
- NEP-EXP-2004-03-28 (Experimental Economics)
- NEP-MIC-2004-03-28 (Microeconomics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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NBER Working Papers
0401, National Bureau of Economic Research, Inc.
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- Babcock, Linda, et al, 1995. "Biased Judgments of Fairness in Bargaining," American Economic Review, American Economic Association, vol. 85(5), pages 1337-43, December.
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