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Confidence, Self-Selection and Bias in the Aggregate

Author

Listed:
  • Benjamin Enke
  • Thomas Graeber
  • Ryan Oprea

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.

Suggested Citation

  • Benjamin Enke & Thomas Graeber & Ryan Oprea, 2022. "Confidence, Self-Selection and Bias in the Aggregate," NBER Working Papers 30262, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:30262
    Note: AP CF LE
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    Cited by:

    1. Eleonora Alabrese & Francesco Capozza & Prashant Garg, 2024. "Politicized Scientists: Credibility Cost of Political Expression on Twitter," CESifo Working Paper Series 11254, CESifo.
    2. Rastislav Rehak, 2022. "Sequential Sampling Beyond Decisions? A Normative Model of Decision Confidence," CERGE-EI Working Papers wp739, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    3. Grunewald, Andreas & Klockmann, Victor & von Schenk, Alicia & von Siemens, Ferdinand, 2024. "Are biases contagious? The influence of communication on motivated beliefs," W.E.P. - Würzburg Economic Papers 109, University of Würzburg, Department of Economics.
    4. Pedro Gonzalez-Fernandez, 2024. "Belief Bias Identification," Papers 2404.09297, arXiv.org.

    More about this item

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles

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