Why Do People Pay for Useless Advice? Implications of Gambler's and Hot-Hand Fallacies in False-Expert Setting

We investigated experimentally whether people can be induced to believe in a non-existent expert, and subsequently pay for what can only be described as transparently useless advice about future chance events. Consistent with the theoretical predictions made by Rabin (2002) and Rabin and Vayanos (2010), we show empirically that the answer is yes and that the size of the error made systematically by people is large.

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Year of publication:	2012-05
Authors:	Powdthavee, Nattavudh ; Riyanto, Yohanes E.
Institutions:	Institute for the Study of Labor (IZA)
Subject:	gambler's fallacy \| hot-hand \| random streak \| expertise \| information

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Extent:	application/pdf
Series:	IZA Discussion Papers.
Type of publication:	Book / Working Paper
Notes:	Number 6557 26 pages
Classification:	C91 - Laboratory, Individual Behavior ; D03 - Behavioral Economics; Underlying Principles
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10011279343