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On the conjunction fallacy in probability judgment: New experimental evidence regarding Linda

  • Charness, Gary
  • Karni, Edi
  • Levin, Dan

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 Tversky and Kahneman (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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Article provided by Elsevier in its journal Games and Economic Behavior.

Volume (Year): 68 (2010)
Issue (Month): 2 (March)
Pages: 551-556

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Handle: RePEc:eee:gamebe:v:68:y:2010:i:2:p:551-556
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  1. John A. List, 2003. "Does Market Experience Eliminate Market Anomalies?," The Quarterly Journal of Economics, Oxford University Press, vol. 118(1), pages 41-71.
  2. Dan Ariely & Uri Gneezy & George Loewenstein & Nina Mazar, 2005. "Large stakes and big mistakes," Working Papers 05-11, Federal Reserve Bank of Boston.
  3. Charness, Gary & Rabin, Matthew, 2001. "Understanding Social Preferences with Simple Tests," Department of Economics, Working Paper Series qt4qz9k8vg, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  4. 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.
  5. Gary Charness & Edi Karni & Dan Levin, 2007. "Individual and group decision making under risk: An experimental study of Bayesian updating and violations of first-order stochastic dominance," Journal of Risk and Uncertainty, Springer, vol. 35(2), pages 129-148, October.
  6. John List, 2003. "Does market experience eliminate market anomalies?," Natural Field Experiments 00297, The Field Experiments Website.
  7. Matthias Sutter, 2008. "Individual behavior and group membership: Comment," Jena Economic Research Papers 2008-075, Friedrich-Schiller-University Jena.
  8. repec:tpr:qjecon:v:117:y:2002:i:3:p:817-869 is not listed on IDEAS
  9. Gerd Gigerenzer, 1997. "Bounded Rationality: Models of Fast and Frugal Inference," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 133(II), pages 201-218, June.
  10. 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.
  11. Gary Charness & Matthew Rabin, 2002. "Understanding Social Preferences with Simple Tests," The Quarterly Journal of Economics, Oxford University Press, vol. 117(3), pages 817-869.
  12. 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.
  13. Yan Chen & Sherry Xin Li, 2009. "Group Identity and Social Preferences," American Economic Review, American Economic Association, vol. 99(1), pages 431-57, March.
  14. Charness, Gary B & Levin, Dan & Karni, Edi, 2008. "On the Conjunction Fallacy in Probability Judgment: New Experimental Evidence," University of California at Santa Barbara, Economics Working Paper Series qt2dn4t727, Department of Economics, UC Santa Barbara.
  15. repec:tpr:qjecon:v:118:y:2003:i:1:p:41-71 is not listed on IDEAS
  16. Gary Charness & Luca Rigotti & Aldo Rustichini, 2007. "Individual Behavior and Group Membership," American Economic Review, American Economic Association, vol. 97(4), pages 1340-1352, September.
  17. Charles A. Holt & Susan K. Laury, 2002. "Risk Aversion and Incentive Effects," American Economic Review, American Economic Association, vol. 92(5), pages 1644-1655, December.
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