Many papers have reported behavioral biases in belief formation that come on top of standard game-theoretic reasoning. We show that the processes involved depend on the way participants reason about their beliefs. When they think about what everybody else or another "unspeci fied" individual is...

In this paper, we hypothesize that the strength of the consensus effect, i.e., the tendency for people to overweight the prevalence of their own values and preferences when forming beliefs about others' values and preferences, depends on the salience of own preferences. We manipulate salience by...

How do individuals process non-diagnostic information? According to Bayes’ Theorem, signals which do not carry relevant information about the objective state of the world are treated as if no signal occurred. This paper provides experimental evidence that individuals update their expectations...

The great recession (2008) triggered an apparent discrepancy between empirical findings and macroeconomic models based on rational expectations alone. This gap led to a series of recent developments of a behavioral microfoundation of macroeconomics combined with the underlying experimental and...

On average young people "undersave" whereas old people "oversave" with respect to the rational expectations model of life-cycle consumption and savings. According to numerous studies on subjective survival beliefs, young people also "underestimate" whereas old people "overestimate" their...

In this paper, we address the concept of trust by combining (i) the self-reported trust and belief in trustworthiness of others from a general unpaid questionnaire, (ii) choices made in a social valuation task designed to measure subjects' distributional preferences, (iii) strategies submitted...