Activities per year
Abstract / Description of output
When an agent chooses between prospects, noise in information processing generates an effect akin to the winner's curse. Statistically unbiased perception systematically overvalues the chosen action because it fails to account for the possibility that noise is responsible for making the preferred action appear to be optimal. The optimal perception pattern exhibits a key feature of prospect theory, namely, overweighting of small probability events (and corresponding underweighting of high probability events). This bias arises to correct for the winner's curse effect.
Original language | English |
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Pages (from-to) | 1601-1631 |
Journal | American Economic Review |
Volume | 106 |
Issue number | 7 |
DOIs | |
Publication status | Published - 1 Jul 2016 |
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SIRE BIC Microeconomic Theory Workshop
Jakub Steiner (Speaker)
17 Oct 2015Activity: Participating in or organising an event types › Participation in workshop, seminar, course
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Economics seminar
Jakub Steiner (Speaker)
2015Activity: Participating in or organising an event types › Participation in workshop, seminar, course
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Economics seminar
Jakub Steiner (Speaker)
2014Activity: Participating in or organising an event types › Participation in workshop, seminar, course