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Do Reputation Concerns Make Behavioral Biases Disappear? The Conjunction Fallacy on Facebook and Mechanical Turk

Author

Listed:
  • Giovanna Devetag
  • Francesca Ceccacci
  • Paola De Salvo

Abstract

This paper reports the results of experiments designed to test whether individuals interacting on Facebook are more likely to succumb to the conjunction fallacy when they post their answers publicly and are exposed to the answers of others. Using the experimental design in Kahneman and Tversky (1983), we find that the proportion of individuals violating the conjunction rule on Facebook is substantially lower than that reported by previous experiments conducted in the lab, regardless of whether responses are public or private. When responses are posted in a public form, however, the partic- ipation rate is substantially higher. The violation rate on Facebook is also significantly lower than the rate of violation from the same experiment run on Mechanical Turk, a popular online labor market, with monetary incentives. Adding a bonus for the correct answer reduces the violation rate on Mechanical Turk when answers are private, but not when they are public, suggesting that peer effects may indeed counteract the effect of monetary incentives. Our experiment casts doubts about the robustness of behavioral biases for the understanding of real life decisions in environments in which interaction is not anonymous and people are reputation conscious, and suggests the power of social networks to mitigate their effects

Suggested Citation

  • Giovanna Devetag & Francesca Ceccacci & Paola De Salvo, 2013. "Do Reputation Concerns Make Behavioral Biases Disappear? The Conjunction Fallacy on Facebook and Mechanical Turk," CEEL Working Papers 1303, Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia.
  • Handle: RePEc:trn:utwpce:1303
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    File URL: http://www-ceel.economia.unitn.it/papers/papero13_03.pdf
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    References listed on IDEAS

    as
    1. Egebark, Johan & Ekström, Mathias, 2011. "Like What You Like or Like What Others Like? - Conformity and Peer Effects on Facebook," Research Papers in Economics 2011:27, Stockholm University, Department of Economics.
    2. Gabriele Paolacci & Jesse Chandler & Panagiotis G. Ipeirotis, 2010. "Running experiments on Amazon Mechanical Turk," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 5(5), pages 411-419, August.
    3. Charness, Gary & Karni, Edi & Levin, Dan, 2010. "On the conjunction fallacy in probability judgment: New experimental evidence regarding Linda," Games and Economic Behavior, Elsevier, vol. 68(2), pages 551-556, March.
    4. Bikhchandani, Sushil & Hirshleifer, David & Welch, Ivo, 1992. "A Theory of Fads, Fashion, Custom, and Cultural Change in Informational Cascades," Journal of Political Economy, University of Chicago Press, vol. 100(5), pages 992-1026, October.
    5. repec:cup:judgdm:v:5:y:2010:i:5:p:411-419 is not listed on IDEAS
    6. Abhijit V. Banerjee, 1992. "A Simple Model of Herd Behavior," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(3), pages 797-817.
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    More about this item

    Keywords

    Facebook; conjunction fallacy; biases; peer effects; field experiments; incentives; reputation;
    All these keywords.

    JEL classification:

    • A14 - General Economics and Teaching - - General Economics - - - Sociology of Economics
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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