Abstract

http://ssrn.com/abstract=1347043
 
 

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Forgetting We Forget: Overconfidence and Memory


Keith M. Marzilli Ericson


Boston University - Markets, Public Policy, and Law; National Bureau of Economic Research (NBER)

February 26, 2009

Journal of the European Economic Association, Forthcoming

Abstract:     
Do individuals have unbiased beliefs, or are they over- or underconfident? Overconfident individuals may fail to prepare optimally for the future, and economists who infer preferences from behavior under the assumption of unbiased beliefs will make mistaken inferences. This paper documents overconfidence in a new domain, prospective memory, using an experimental design that is more robust to potential confounds than previous research. Subjects chose between smaller automatic payments and larger payments they had to remember to claim at a six-month delay. In a large sample of college and MBA students at two different universities, subjects make choices that imply a forecast of a 76% claim rate, but only 53% of subjects actually claimed the payment.

Number of Pages in PDF File: 21

Keywords: overconfidence, memory, prospective memory, beliefs

JEL Classification: C91, D81, D83, D84

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Date posted: March 18, 2009 ; Last revised: December 14, 2009

Suggested Citation

Ericson, Keith M. Marzilli, Forgetting We Forget: Overconfidence and Memory (February 26, 2009). Journal of the European Economic Association, Forthcoming. Available at SSRN: http://ssrn.com/abstract=1347043 or http://dx.doi.org/10.2139/ssrn.1347043

Contact Information

Keith M. Marzilli Ericson (Contact Author)
Boston University - Markets, Public Policy, and Law ( email )
Boston, MA
United States
National Bureau of Economic Research (NBER) ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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