The price of luck: paying for the hot hand of others
Abstract We report on the results of an experiment with a statistical choice task involving the toss of a fair coin. In our experiment, participants had to decide whether they were willing to pay a price to switch from betting on the future performance of one player to betting on that of another player. The switch was from a player who had been previously less successful in betting on five coin flips to another one who had been more successful in the same task. We conducted a treatment with the Becker–DeGroot–Marschak mechanism and one in which participants were faced with a fixed price. In both cases, participants exhibit a strong bias towards placing their bets on players with a good guessing history in the coin toss task. Participants’ behaviour is compatible with prescriptive luck beliefs, that is, the idea that luck is a somehow deterministic and personal attribute.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 2 (2016)
Issue (Month): 1 (May)
|Contact details of provider:|| Web page: http://www.springer.com|
Web page: https://www.economicscience.org/index.html
More information through EDIRC
|Order Information:||Web: http://www.springer.com/journal/40881|
References listed on IDEAS
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.:
- Theo Offerman & Joep Sonnemans, 2004.
"What's Causing Overreaction? An Experimental Investigation of Recency and the Hot-hand Effect,"
Scandinavian Journal of Economics,
Wiley Blackwell, vol. 106(3), pages 533-554, October.
- Offerman, T.J.S. & Sonnemans, J.H., 1997. "What's causing overreaction? : An experimental investigation of recency and the hot hand effect," Discussion Paper 1997-36, Tilburg University, Center for Economic Research.
- Noussair, Charles & Robin, Stephane & Ruffieux, Bernard, 2004. "Revealing consumers' willingness-to-pay: A comparison of the BDM mechanism and the Vickrey auction," Journal of Economic Psychology, Elsevier, vol. 25(6), pages 725-741, December.
- Matthew Rabin & Dimitri Vayanos, 2010. "The Gambler's and Hot-Hand Fallacies: Theory and Applications," Review of Economic Studies, Oxford University Press, vol. 77(2), pages 730-778.
- Matthew Rabin & Dimitri Vayanos, 2007. "The gambler's and hot-hand fallacies: theory and applications," LSE Research Online Documents on Economics 24476, London School of Economics and Political Science, LSE Library.
- Rabin, Matthew & Vayanos, Dimitri, 2007. "The Gambler's and Hot-Hand Fallacies: Theory and Applications," CEPR Discussion Papers 6081, C.E.P.R. Discussion Papers.
- Matthew Rabin & Dimitri Vayanos, 2007. "The Gambler's and Hot-Hand Fallacies:Theory and Applications," FMG Discussion Papers dp578, Financial Markets Group.
- Nattavudh Powdthavee & Yohanes E. Riyanto, 2015. "Would you Pay for Transparently Useless Advice? A Test of Boundaries of Beliefs in The Folly of Predictions," The Review of Economics and Statistics, MIT Press, vol. 97(2), pages 257-272, May.
- Björn Bartling & Florian Engl & Roberto A. Weber, 2014. "Game form misconceptions are not necessary for a willingness-to-pay vs. willingness-to-accept gap," ECON - Working Papers 180, Department of Economics - University of Zurich, revised Apr 2015.
- Offerman, Theo & Schotter, Andrew, 2009. "Imitation and luck: An experimental study on social sampling," Games and Economic Behavior, Elsevier, vol. 65(2), pages 461-502, March.
- Theo Offerman & Andrew Schotter, 2007. "Imitation and Luck: An Experimental Study on Social Sampling," Working Papers 0020, New York University, Center for Experimental Social Science.
- Yuan, Jia & Sun, Guang-Zhen & Siu, Ricardo, 2014. "The lure of illusory luck: How much are people willing to pay for random shocks," Journal of Economic Behavior & Organization, Elsevier, vol. 106(C), pages 269-280.
- Joshua B. Miller & Adam Sanjurjo, 2014. "A Cold Shower for the Hot Hand Fallacy," Working Papers 518, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
- Joshua B. Miller & Adam Sanjurjo, 2015. "Is it a Fallacy to Believe in the Hot Hand in the NBA Three-Point Contest?," Working Papers 548, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
- Horowitz, John K., 2006. "The Becker-DeGroot-Marschak mechanism is not necessarily incentive compatible, even for non-random goods," Economics Letters, Elsevier, vol. 93(1), pages 6-11, October.
- Elena Asparouhova & Michael Hertzel & Michael Lemmon, 2009. "Inference from Streaks in Random Outcomes: Experimental Evidence on Beliefs in Regime Shifting and the Law of Small Numbers," Management Science, INFORMS, vol. 55(11), pages 1766-1782, November.
- Harrison, Glenn W, 1992. "Theory and Misbehavior of First-Price Auctions: Reply," American Economic Review, American Economic Association, vol. 82(5), pages 1426-1443, December.
- Matthew Rabin, 2002. "Inference by Believers in the Law of Small Numbers," The Quarterly Journal of Economics, Oxford University Press, vol. 117(3), pages 775-816.
- Timothy N. Cason & Charles R. Plott, 2014. "Misconceptions and Game Form Recognition: Challenges to Theories of Revealed Preference and Framing," Journal of Political Economy, University of Chicago Press, vol. 122(6), pages 1235-1270. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:spr:jesaex:v:2:y:2016:i:1:d:10.1007_s40881-016-0023-9. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla)or (Rebekah McClure)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.