Why Do People Pay for Useless Advice? Implications of Gambler's and Hot-Hand Fallacies in False-Expert Setting
AbstractWe investigated experimentally whether people can be induced to believe in a non-existent expert, and subsequently pay for what can only be described as transparently useless advice about future chance events. Consistent with the theoretical predictions made by Rabin (2002) and Rabin and Vayanos (2010), we show empirically that the answer is yes and that the size of the error made systematically by people is large.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6557.
Length: 26 pages
Date of creation: May 2012
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Find related papers by JEL classification:
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
- D03 - Microeconomics - - General - - - Behavioral Economics; Underlying Principles
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-05-29 (All new papers)
- NEP-CBE-2012-05-29 (Cognitive & Behavioural Economics)
- NEP-SEA-2012-05-29 (South East Asia)
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- La Fuerte Demanda por Charlatanes
by Alejandro Villagomez in Tintero Económico Diario on 2012-05-28 00:14:00
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