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Confidence, Self-Selection and Bias in the Aggregate

By: Benjamin Enke, Thomas Graeber and Ryan Oprea
  • Format:Electronic
  • | Language:English
  • | Pages:85
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Abstract

The influence of behavioral biases on aggregate outcomes like prices and allocations depends in part on self-selection: whether rational people opt more strongly into aggregate interactions than biased individuals. We conduct a series of betting market, auction and committee experiments using 15 classic cognitive bias tasks. We document that some cognitive errors are strongly reduced through self-selection, while others are not affected at all. A large part of this variation is explained by the quality of people's meta-cognition. In some cognitive tasks, confidence and performance are strongly positively correlated, while for others this link is absent or even negative.

Keywords

Prejudice and Bias; Cognition and Thinking; Markets; Price

Citation

Enke, Benjamin, Thomas Graeber, and Ryan Oprea. "Confidence, Self-Selection and Bias in the Aggregate." NBER Working Paper Series, No. 30262, July 2022.

About The Author

Thomas W. Graeber

Negotiation, Organizations & Markets
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