Department of Economics

Faculty of Arts and Social Sciences

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Seminar - Upcoming

   
 
Seminars
 
Upcoming
2013 Asia Summer Institute in Behavioral Economics
Asian Meeting of the Econometric Society 2013
Past Events

Department Seminar

Topic:      

Would you pay for transparently useless advice? A test of boundaries of beliefs in the folly of predictions

Speaker:
Nattavudh (Nick) Powdthavee
University of Melbourne and London School of Economics & Political Science

Date: February 06, Friday
Time: 10.30am - 12.00pm

Venue:

Silcock Journal Room (AS2 06-23)
National University of Singapore
1 Arts Link, Singapore 117570

Chair:

Chew Soo Hong

Abstract:

Standard economic models assume that the demand for expert predictions arise only under the conditions in which (i) individuals are uncertain about the underlying process generating the data, and (ii) there is a strong belief that past performances predict future performances. Thus, when it is transparently clear that the event in question is truly random, there should be no market for expert predictions. We set up the strongest possible test of these assumptions in the laboratory. In contrast to the theoretical suggestions made in the literature, people are willing to pay for predictions of truly random outcomes after witnessing only a short streak of accurate predictions live in the lab. Potential explanations and implications of such “irrational learning” are discussed in the contexts of economics and finance.

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