Template-type: ReDif-Paper 1.0
Author-Name: Dohmen Thomas 
Author-Name: Falk Armin 
Author-Name: Huffman David 
Author-Name: Marklein Felix 
Author-Name: Sunde Uwe 
Author-workplace-name: METEOR
Title: The Non-Use of Bayes Rule: Representative Evidence on Bounded Rationality
Abstract: The ability to process new information and to compute conditional probabilities is crucial for making appropriate decisions under uncertainty. In this paper, we investigate the capability of inferring conditional probabilities in a representative sample of the German population. Our results show that only a small fraction of the population responds consistently with Bayes'' rule. Instead, most individuals either neglect the base probability, or the arrival of new information, in their responses. The probability to give normatively correctanswers decreases with the level of education.
Keywords: labour economics ; 
Series: Research Memoranda
Creation-Date: 2009
Number: 038
File-URL: http://edocs.ub.unimaas.nl/loader/file.asp?id=1443
File-Format: application/pdf
File-Size: 416016
Handle: RePEc:unm:umamet:2009038