Publication
Title
Base rate neglect for the wealth of interacting people
Author
Abstract
Previous research investigating base rate neglect as a bias in human information processing has focused on isolated individuals. This study complements this research by showing that in settings of interacting individuals, especially in settings of social learning, where individuals can learn from one another, base rate neglect can increase a population's welfare. This study further supports the research arguing that a population with members biased by neglecting base rates does not need to perform worse than a population with unbiased members. Adapting the model of social learning suggested by Bikhchandani, Hirshleifer and Welch (The Journal of Political Economy100 (1992) 992-1026) and including base rates that differ from generic cases such as 50-50, conditions are identified that make underweighting base rate information increasing the population's welfare. The base rate neglect can start a social learning process that otherwise had not been started and thus base rate neglect can generate positive externalities improving a population's welfare
Language
English
Source (journal)
Advances in complex systems. - Singapore
Publication
Singapore : 2010
ISSN
0219-5259
Volume/pages
13:5(2010), p. 607-619
ISI
000283075200001
Full text (Publisher's DOI)
UAntwerpen
Faculty/Department
Research group
Publication type
Subject
Affiliation
Publications with a UAntwerp address
External links
Web of Science
Record
Identification
Creation 26.10.2010
Last edited 12.08.2017
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