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On the Conjunction Fallacy in Probability Judgment: New Experimental Evidence Regarding Linda

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Edi Karni
Abstract

This paper reports the results of a series of experiments designed to test whether and to what extent individuals succumb to the conjunction fallacy. Using an experimental design of Kahneman and Tversky (1983), it finds that given mild incentives, the proportion of individuals who violate the conjunction principle is significantly lower than that reported by Kahneman and Tversky. Moreover, when subjects are allowed to consult with other subjects, these proportions fall dramatically, particularly when the size of the group rises from two to three. These findings cast serious doubts about the importance and robustness of such violations for the understanding of real-life economic decisions.

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Paper provided by The Johns Hopkins University,Department of Economics in its series Economics Working Paper Archive with number 552.

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Date of creation: May 2009
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Handle: RePEc:jhu:papers:552

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  1. Sutter, Matthias, 2005. "Are four heads better than two? An experimental beauty-contest game with teams of different size," Economics Letters, Elsevier, vol. 88(1), pages 41-46, July. [Downloadable!] (restricted)
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  2. Yan Chen & Sherry Xin Li, 2009. "Group Identity and Social Preferences," American Economic Review, American Economic Association, vol. 99(1), pages 431-57, March. [Downloadable!]
  3. Gary Charness & Matthew Rabin, 2002. "Understanding Social Preferences with Simple Tests," Department of Economics, Working Paper Series 1042, Department of Economics, Institute for Business and Economic Research, UC Berkeley. [Downloadable!]
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  4. Dan Ariely & Uri Gneezy & George Loewenstein & Nina Mazar, 2009. "Large Stakes and Big Mistakes," Review of Economic Studies, Blackwell Publishing, vol. 76(2), pages 451-469, 04. [Downloadable!] (restricted)
  5. Irving Lorge & Herbert Solomon, 1955. "Two models of group behavior in the solution of eureka-type problems," Psychometrika, Springer, vol. 20(2), pages 139-148, June. [Downloadable!] (restricted)
  6. David J. Cooper & John H. Kagel, 2005. "Are Two Heads Better Than One? Team versus Individual Play in Signaling Games," American Economic Review, American Economic Association, vol. 95(3), pages 477-509, June. [Downloadable!]
  7. John A. List, 2003. "Does Market Experience Eliminate Market Anomalies?," The Quarterly Journal of Economics, MIT Press, vol. 118(1), pages 41-71, February. [Downloadable!] (restricted)
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