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Are People Bayesian? Uncovering Behavioral Strategies

El-Gamal, Mahmoud and Grether, David M. (1995) Are People Bayesian? Uncovering Behavioral Strategies. Social Science Working Paper, 919. California Institute of Technology , Pasadena, CA. (Unpublished)

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Economists and psychologists have recently been developing new theories of decision making under uncertainty that can accommodate the observed violations of standard statistical decision theoretic axioms by experimental subjects. We propose a procedure which finds a collection of decision rules that best explain the behavior of experimental subjects. The procedure is a combination of maximum likelihood estimation of the rules together with an implicit classification of subjects to the various rules, and a penalty for having too many rules. We apply our procedure to data on probabilistic updating by subjects in four different universities. We get remarkably robust results which show that the most important rules used by the subjects (in order of importance) are Bayes's rule, a representativeness rule (ignoring the prior), and to a lesser extent, conservatism (over-weighting the prior).

Item Type:Report or Paper (Working Paper)
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Additional Information:Published as El-Gamal, Mahmoud A., and David M. Grether. "Are people Bayesian? Uncovering behavioral strategies." Journal of the American statistical Association 90, no. 432 (1995): 1137-1145.
Group:Social Science Working Papers
Subject Keywords:Classification, Learning, Mixture models, Probability assessments
Series Name:Social Science Working Paper
Issue or Number:919
Classification Code:JEL: 026, 211, 215
Record Number:CaltechAUTHORS:20170818-145519355
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Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:80629
Deposited By: Jacquelyn Bussone
Deposited On:21 Aug 2017 16:49
Last Modified:03 Oct 2019 18:33

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