Information Characteristics and Errors in Expectations: Experimental Evidence

B-Tier
Journal: Journal of Financial and Quantitative Analysis
Year: 2017
Volume: 52
Issue: 2
Pages: 737-750

Authors (4)

Antoniou, Constantinos (not in RePEc) Harrison, Glenn W. (Georgia State University) Lau, Morten I. (Copenhagen Business School) Read, Daniel (not in RePEc)

Score contribution per author:

0.503 = (α=2.01 / 4 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

We design an experiment to test the hypothesis that, in violation of Bayes’ rule, some people respond more forcefully to the strength of information than to its weight. We provide incentives to motivate effort, use naturally occurring information, and control for risk attitude. We find that the strength–weight bias affects expectations but that its magnitude is significantly lower than originally reported. Controls for nonlinear utility further reduce the bias. Our results suggest that incentive compatibility and controls for risk attitude considerably affect inferences on errors in expectations.

Technical Details

RePEc Handle
repec:cup:jfinqa:v:52:y:2017:i:02:p:737-750_00
Journal Field
Finance
Author Count
4
Added to Database
2026-01-25