Everyday Econometricians: Selection Neglect and Overoptimism When Learning from Others

This study explores selection neglect in an experimental investment game where individuals can learn from others’ outcomes. Experiment 1 examines aggregate-level equilibrium behavior. We find strong evidence of selection neglect and corroborate several comparative static predictions of Jehiel’s (2018) model, showing that the severity of the bias is aggravated by the sophistication of other individuals and moderated when information is more correlated across individuals. Experiment 2 focuses on individual decision-making, isolating the influence of beliefs from possible confounding factors. This allows us to classify individuals according to their degree of naïvety and explore the limits of, and potential remedies for, selection neglect. (JEL C91, D12, D83, D91, G41)

• Publication year

  2024

• Venue

  American Economic Journal: Microeconomics

• Publication date

  2024-08-01

• Fields of study

  Economics

• Identifiers
  DOI 10.1257/mic.20200030
• External record

  Open on Semantic Scholar

• Source metadata

  Semantic Scholar

• No claims are published for this paper.

• No concepts are published for this paper.

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