Template-type: ReDif-Paper 1.0
Author-Name: Dohmen Thomas 
Author-Name: Falk Armin 
Author-Name: Huffman David 
Author-Name: Felix Marklein 
Author-Name: Sunde Uwe 
Author-workplace-name: ROA rm
Title: The Non-Use of Bayes Rule: Representative Evidence on Bounded Rationality
Abstract: The ability to process new information and to compute conditional probabilities iscrucial for making appropriate decisions under uncertainty. In this paper, weinvestigate the capability of inferring conditional probabilities in a representativesample of the German population. Our results show that only a small fraction ofthe population responds consistently with Bayes'' rule. Instead, most individualseither neglect the base probability, or the arrival of new information, in theirresponses. The probability to give normatively correct answers decreases with thelevel of education.
Keywords: labour market entry and occupational careers; 
Series: Research Memoranda
Creation-Date: 2009
Number: 001
File-URL: http://edocs.ub.unimaas.nl/loader/file.asp?id=1383
File-Format: application/pdf
File-Size: 324706
Handle: RePEc:unm:umaror:2009001