Bayesian Instinct
44 Pages
Posted: 15 Feb 2017
Last revised: 5 Apr 2017
Wharton - Operations, Information and Decisions
Stanford Graduate School of Business
Date Written: April 3, 2017
Abstract
Do experts form rational beliefs when making split-second, sophisticated judgments? A long literature suggests not: individuals often form prior beliefs from biased sampling and update those beliefs by improperly weighting new information. This paper studies belief formation by professional umpires in Major League Baseball. We show that the decisions of umpires reflect an accurate, probabilistic, and state-specific understanding of their rational expectations—as well as an ability to integrate those prior beliefs in a manner that approximates Bayes rule. Given that umpires have barely a second to form beliefs and make a decision, we conclude that the instincts of professional umpires mimic a sophisticated level of rationality remarkably well.
Keywords: beliefs, rational expectations, Bayes rule, field study, experts
JEL Classification: D81, D83, D84
Suggested Citation:
Suggested Citation
Green, Etan A. and Daniels, David P., Bayesian Instinct (April 3, 2017). Available at SSRN: https://ssrn.com/abstract=2916929 or http://dx.doi.org/10.2139/ssrn.2916929
