Cognitive abilities and behavioral biases

Oechssler, Jörg; Roider, Andreas; Schmitz, Patrick W.

doi:10.1016/j.jebo.2009.04.018

Cited by 396 publications

(299 citation statements)

References 20 publications

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“…It is well documented that CRT-scores are significantly related to a number of other individual attributes such as risk preferences, general cognitive abilities or gender (Frederick, 2005;Oechssler et al, 2009). Subjects in this study are no exception: Male participants reach a significantly (M.W.…”

Section: Regression Resultsmentioning

confidence: 99%

“…In this context the study of cognitive abilities as a measurable attribute with considerable inter-individual variability has recently received increasing attention (e.g. Frederick, 2005;Burks et al, 2009;Oechssler et al, 2009;Benjamin et al, 2013). For example, individuals with higher cognitive abilities have been shown to behave less risk averse (Dohmen et al, 2010), to discount future payments at lower rates (Frederick, 2005;Benjamin et al, 2013), to display smaller biases in financial decision making (Oechssler et al, 2009) and to employ higher levels of strategic reasoning (Burnham et al, 2009;Carpenter et al, 2013).…”

Section: Introductionmentioning

confidence: 99%

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Smart or Selfish - When Smart Guys Finish Nice

Lohse

2014

SSRN Journal

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In three different variants of an one-shot public good game I analyze the relationship between cooperation and cognitive abilities, assessed through the cognitive reflection test (CRT). In a between-subjects design, the baseline case is contrasted with two treatment conditions that allow to control for two potentially moderating factors: By employing a test for the presence of confusion, the first condition scrutinizes whether higher cognitive abilities are correlated with cooperation proper or simply grant a better understanding of the incentive structure. The second condition explores the proposition that the link between cognitive abilities and cooperation could depend on the complexity of the decision situation. To exogenously create a cognitively more demanding choice setting, subjects had to decide under time pressure. I find a strong and positive relationship between CRT-scores and cooperation, that is not driven by confusion. Time pressure has a strongly moderating effect on this relationship.

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Section: Regression Resultsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Smart or Selfish - When Smart Guys Finish Nice

Lohse

2014

SSRN Journal

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“…They have also investigated whether the cognitive abilities of subjects are related to behavioral biases in general (and to the conjunction fallacy in particular, cf. Oechssler et al 2009), and this has led to stimulating research with applications in finance. Epistemologists have made confirmation and Bayesianism enter the debate (e.g.…”

Section: Introductionmentioning

confidence: 99%

Quantum-like models cannot account for the conjunction fallacy

2016

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Human agents happen to judge that a conjunction of two terms is more probable than one of the terms, in contradiction with the rules of classical probabilities-this is the conjunction fallacy. One of the most discussed accounts of this fallacy is currently the quantum-like explanation, which relies on models exploiting the mathematics of quantum mechanics. The aim of this paper is to investigate the empirical adequacy of major quantum-like models which represent beliefs with quantum states. We first argue that they can be tested in three different ways, in a question order effect configuration which is different from the traditional conjunction fallacy experiment. We then carry out our proposed experiment, with varied methodologies from experimental economics. The experimental results we get are at odds with the predictions of the quantum-like models. This strongly suggests that this quantum-like account of the conjunction fallacy fails. Future possible research paths are discussed.

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“…Of course, one has to be very careful in interpreting these empirical findings, as job search decisions and financial decisions are highly complex and likely to be influenced by many other factors, 3 See also the seminal contribution by Cattell (1963). 4 Based on data from a web-based experiment among a sample of university students, Oechssler et al (2009) report that higher cognitive ability is associated with lower incidences of biased judgment.…”

Section: Introductionmentioning

confidence: 99%

Biased probability judgment: Evidence of incidence and relationship to economic outcomes from a representative sample

Dohmen¹,

Falk²,

Huffman³

et al. 2009

Journal of Economic Behavior & Organization

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E SIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. Many economic decisions involve a substantial amount of uncertainty, and therefore crucially depend on how individuals process probabilistic information. In this paper, we investigate the capability for probability judgment in a representative sample of the German population. Our results show that almost a third of the respondents exhibits systematically biased perceptions of probability. The findings also indicate that the observed biases are related to individual economic outcomes, which suggests potential policy relevance of our findings. JEL Classification:C90, D00, D10, D80, D81, H00

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Cognitive abilities and behavioral biases

Cited by 396 publications

References 20 publications

Smart or Selfish - When Smart Guys Finish Nice

Smart or Selfish - When Smart Guys Finish Nice

Quantum-like models cannot account for the conjunction fallacy

Biased probability judgment: Evidence of incidence and relationship to economic outcomes from a representative sample

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