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The Expert and The Charlatan: an Experimental Study in Economic Advice

Author

Listed:
  • Aristotelis Boukouras
  • Theodore Alysandratos
  • Sotiris Georganas
  • Zacharias Maniadis

Abstract

How do people choose what economic advice to heed? We develop a set of validated multiple-choice questions on economic policy problems, to examine empirically the persuasiveness of expert versus populist advice. We define populism as advice that conforms to commonly held beliefs, even when wrong. Two (computerised) advisers suggest answers to each question, and experimental participants are incentivised to choose the most accurate adviser. Do participants choose the high-accuracy adviser (`the Expert'), or the low-accuracy one (`the Charlatan'), whose answers are designed to be similar to the modal participant's priors? Our participants overwhelmingly choose the Charlatan, and this is only slowly and partially reversed with sequential feedback on the correct answer. We develop Bayesian models to determine optimal choice benchmarks, but find that behaviour is best explained by a naive choice model akin to reinforcement learning with high inertia

Suggested Citation

  • Aristotelis Boukouras & Theodore Alysandratos & Sotiris Georganas & Zacharias Maniadis, 2020. "The Expert and The Charlatan: an Experimental Study in Economic Advice," Discussion Papers in Economics 20/06, Division of Economics, School of Business, University of Leicester.
  • Handle: RePEc:lec:leecon:20/06
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    File URL: https://www.le.ac.uk/economics/research/RePEc/lec/leecon/dp20-06.pdf
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    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Choosing charlatans
      by chris in Stumbling and Mumbling on 2021-02-13 12:55:24

    More about this item

    Keywords

    Democracy; Economic Literacy; Expert Advice; Populism;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • A11 - General Economics and Teaching - - General Economics - - - Role of Economics; Role of Economists

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