The Tree of Experience in the Forest of Information: Overweighing Experienced Relative to Observed Information

52 Pages Posted: 30 Mar 2004

See all articles by Uri Simonsohn

Uri Simonsohn

Ramon Llull University - ESADE Business School

Niklas Karlsson

Goteborg University, Faculty of Social Sciences, Department of Psychology

George Loewenstein

Carnegie Mellon University - Department of Social and Decision Sciences

Dan Ariely

Duke University - Fuqua School of Business

Date Written: October 2006

Abstract

Standard economic models assume that the weight given to information from different sources depends exclusively on its diagnosticity. In this paper we study whether the same piece of information is weighted more heavily simply because it arose from direct experience rather than from observation. We investigate this possibility by conducting repeated game experiments in which groups of players are randomly rematched on every round and receive feedback about the actions and outcomes of all players. We find that participants' actions are influenced more strongly by the behavior of players they directly interact with than by those they only observe.

Keywords: Games, behavioral economics, psychology, experimental economics, learning

JEL Classification: C9, C92, C83

Suggested Citation

Simonsohn, Uri and Karlsson, Niklas and Loewenstein, George F. and Ariely, Dan, The Tree of Experience in the Forest of Information: Overweighing Experienced Relative to Observed Information (October 2006). Available at SSRN: https://ssrn.com/abstract=521942 or http://dx.doi.org/10.2139/ssrn.521942

Uri Simonsohn (Contact Author)

Ramon Llull University - ESADE Business School ( email )

Avinguda de la Torre Blanca, 59
Sant Cugat del Vall├Ęs, 08172
Spain

HOME PAGE: http://urisohn.com

Niklas Karlsson

Goteborg University, Faculty of Social Sciences, Department of Psychology ( email )

P.O. Box 500
Goteborg, 40530
Sweden

George F. Loewenstein

Carnegie Mellon University - Department of Social and Decision Sciences ( email )

Pittsburgh, PA 15213-3890
United States
412-268-8787 (Phone)
412-268-6938 (Fax)

Dan Ariely

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States
(919) 381-4366 (Phone)

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