Belief Updating: Inference Versus Forecast Revision
| Autor: | Cameron Peng, Tony Fan, Yucheng Liang |
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| Rok vydání: | 2021 |
| Předmět: |
History
Polymers and Plastics Computer science business.industry Inference Information environment Machine learning computer.software_genre Industrial and Manufacturing Engineering Connection (mathematics) Artificial intelligence Business and International Management Link (knot theory) Heuristics business computer |
| Zdroj: | SSRN Electronic Journal. |
| ISSN: | 1556-5068 |
| DOI: | 10.2139/ssrn.3889069 |
| Popis: | Individual forecasts of economic variables show widespread overreaction to news, but laboratory experiments on belief updating typically find underinference from signals. We provide new experimental evidence to connect these two seemingly inconsistent phenomena. Building on a classic experimental paradigm, we study how people make inferences and revise forecasts in the same information environment. Subjects underreact to signals when inferring about underlying states, but overreact to signals when revising forecasts about future outcomes. This gap in belief updating is largely driven by the use of different simplifying heuristics between the two tasks. Additional treatments link our results to the difficulty of recognizing the conceptual connection between making inferences and revising forecasts. |
| Databáze: | OpenAIRE |
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