“Misconceptions of Chance: Evidence from an Integrated Experiment”

Discussion Seminar
Professor Matthew Rabin, UC Berkeley Department of Economics, University of California – Berkeley

Date:
28 November 2012 (Wednesday)

Time and Venue:
4.00pm – 5.30pm Economics Seminar Room, AS2/03-12

(joint with Dan Benjamin and Don Moore). This paper describes results of an incentivized experiment investigating biases that jointly imply logically inconsistent beliefs about random samples. We find that people think past streaks predict reversals, consistent with the gambler’s fallacy.

Consistent with “support theory,” we find that elicitingbeliefs about the union of two ranges of outcomes, relative to the two ranges separately, decreases the total probability assigned to those outcomes. And we confirm earlier findings of Non-Belief in the Law of Large Numbers: people vastly exaggerate the likelihood that 1,000-flip samples that would deviate substantially from 50% heads. Professor Rabin will integrate the presentation of the findings of this experiment with his recent theory work attempting to formalize the departures from rationality found in this experiment and elsewhere.



“What Do (Open-Minded) Economists Want? Psychological and Experimental Evidence That Can Improve Economics”

Discussion Seminar
Professor Matthew Rabin, UC Berkeley Department of Economics, University of California – Berkeley

Date:
20 November 2012 (Tuesday)

Time and Venue:
10.30am – 12.00pm Seminar Room 3-5, Level 3 Mochtar Riady Building

Professor Rabin will give an informal talk describing his perspectives how economists can and can't take advantage of psychological research, and try to provide critical comments how experimental research might be modified to lend itself to greater influence in economics and other social science.