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Memory and Probability / Pedro Bordalo, John J. Conlon, Nicola Gennaioli, Spencer Yongwook Kwon, Andrei Shleifer.
- Format:
- Book
- Author/Creator:
- Bordalo, Pedro.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w29273.
- NBER working paper series no. w29273
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2021.
- Summary:
- People often estimate probabilities, such as the likelihood that an insurable risk will materialize or that an Irish person has red hair, by retrieving experiences from memory. We present a model of this process based on two established regularities of selective recall: similarity and interference. The model accounts for and reconciles a variety of conflicting empirical findings, such as overestimation of unlikely events when these are cued vs. neglect of non-cued ones, the availability heuristic, the representativeness heuristic, as well as over vs. underreaction to information in different situations. The model makes new predictions on how the content of a hypothesis (not just its objective probability) affects probability assessments by shaping the ease of recall. We experimentally evaluate these predictions and find strong experimental support.
- Notes:
- Print version record
- September 2021.
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