Cognitive abilities and behavioral biases
We use a simple, three-item test for cognitive abilities to investigate whether established behavioral biases that play a prominent role in behavioral economics and finance are related to cognitive abilities. We find that higher test scores on the Cognitive Reflection Test of Frederick (2005) indeed...
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| Dokumenttyp: | Book/Monograph Arbeitspapier |
| Sprache: | Englisch |
| Veröffentlicht: |
Mannheim
Univ. Mannheim, Sonderforschungsbereich 504
May 19, 2008
Heidelberg Universitätsbibliothek der Universität Heidelberg May 19, 2008 Heidelberg University of Heidelberg, Department of Economics May 19, 2008 |
| Schriftenreihe: | Discussion paper series / Universität Heidelberg, Department of Economics
no. 465 Discussion Paper Series / Universität <Heidelberg> / Department of Economics 465 |
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Discussion paper series (no. 465)
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| Verfasserangaben: | Jörg Oechssler ; Andreas Roider ; Patrick W. Schmitz |
| Zusammenfassung: | We use a simple, three-item test for cognitive abilities to investigate whether established behavioral biases that play a prominent role in behavioral economics and finance are related to cognitive abilities. We find that higher test scores on the Cognitive Reflection Test of Frederick (2005) indeed are correlated with lower incidences of the conjunction fallacy, conservatism in updating probabil-ities, and overconfidence. Test scores are also significantly related to subjects' time and risk preferences. We find no influence on anchoring. However, even if biases are lower for people with higher cognitive abilities, they still remain substantial. |
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| Beschreibung: | Online Resource |
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