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Advanced Counter-Biasing

Author

Listed:
  • Carpenter, Jeffrey P.

    (Middlebury College)

  • Benscheidt, Kevin

    (Middlebury College)

Abstract

Viewed through the lens of the prominent two-system model of decision making, behavioral economics is seen as studying the tension between impulses (System 1) and rationality (System 2). In this context, two strategies, "de-biasing" informing agents of their biases and "counter-biasing" using "nudges" to activate biases to positively influence choice, have improved the welfare of behavioral agents. We advance the notion of counter-biasing by demonstrating that one bias (present bias) can be pit against another (choking at high stakes) to counteract the ill effects of the second. Our results demonstrate the potential of counter-biasing as an effective policy tool.

Suggested Citation

  • Carpenter, Jeffrey P. & Benscheidt, Kevin, 2019. "Advanced Counter-Biasing," IZA Discussion Papers 12253, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp12253
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    behavioral economics; counter-biasing; present bias; choking; experiment;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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