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The Statistical Distribution of Irrationality

Bågfelt, Thimmy LU (2012) NEKH01 20121
Department of Economics
Abstract (Swedish)
This paper investigates whether the shape of a probability
distribution of a given problem has any predictable effect on the
shape of the distribution of people's associated irrational choices.
Focus is especially on the skewness of distributions. Based on
previous research in psychology and behavioral economics, a
theory of the causes of skewness of choice distributions is
presented. Hypothesis tests on the effect of skewness of probability
space in a card game on the skewness of associated choice
distributions lead to the conclusion that the two are independent.
This finding is consistent with the developed theory, suggesting
that the pervasiveness and nature of ineffective heuristics are more
important determinants of... (More)
This paper investigates whether the shape of a probability
distribution of a given problem has any predictable effect on the
shape of the distribution of people's associated irrational choices.
Focus is especially on the skewness of distributions. Based on
previous research in psychology and behavioral economics, a
theory of the causes of skewness of choice distributions is
presented. Hypothesis tests on the effect of skewness of probability
space in a card game on the skewness of associated choice
distributions lead to the conclusion that the two are independent.
This finding is consistent with the developed theory, suggesting
that the pervasiveness and nature of ineffective heuristics are more
important determinants of skewness in the distribution of choices.
The results are applied to the valuation of goods in a free market. (Less)
Please use this url to cite or link to this publication:
author
Bågfelt, Thimmy LU
supervisor
organization
course
NEKH01 20121
year
type
M2 - Bachelor Degree
subject
keywords
statistical distribution, skewness, irrationality, behavioral economics, choice
language
English
id
2628532
date added to LUP
2012-06-15 12:45:38
date last changed
2012-06-15 12:45:38
@misc{2628532,
  abstract     = {This paper investigates whether the shape of a probability
distribution of a given problem has any predictable effect on the
shape of the distribution of people's associated irrational choices.
Focus is especially on the skewness of distributions. Based on
previous research in psychology and behavioral economics, a
theory of the causes of skewness of choice distributions is
presented. Hypothesis tests on the effect of skewness of probability
space in a card game on the skewness of associated choice
distributions lead to the conclusion that the two are independent.
This finding is consistent with the developed theory, suggesting
that the pervasiveness and nature of ineffective heuristics are more
important determinants of skewness in the distribution of choices.
The results are applied to the valuation of goods in a free market.},
  author       = {Bågfelt, Thimmy},
  keyword      = {statistical distribution,skewness,irrationality,behavioral economics,choice},
  language     = {eng},
  note         = {Student Paper},
  title        = {The Statistical Distribution of Irrationality},
  year         = {2012},
}