Econowmics Blog

The False Mirror | René Magritte | 1928

Actor-Observer Bias

You  are  at  the  casino  watching  a  game  of  Black  Jack, when a player who has a hand of sixteen asks for another card.   You quip to yourself “What an idiot!   He should have held at 16.”   But who’s to say you wouldn’t have done the same?  After all, decision...

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Survivorship bias: dead men don’t tall tales

Diogenes was asked concerning paintings of those who had escaped shipwreck: “Look, you who think the gods have no care of human things, what do you say to so many persons preserved from death by their especial favor?”, to which Diogenes replied: “Why, I say that their pictures are not...

The False Consensus Effect

The False Consensus Effect

The false consensus effect demonstrates an inability of individuals to process information rationally, it suggests that conventional economic analysis of strategic behavior, which assumes unbiased expectation formation, is deficient. A Simple Theory of the False Consensus Effect, Young Park In a sense, every social observer is an intuitive psychologist who...

Amartya Sen

Amartya Sen

Even when altruism is allowed (as, for example, in Gary Becker‘s model of rational allocation), it is assumed that the altruistic actions are undertaken because they promote each person’s own interests; there are personal gains to the altruist’s own welfare, thanks to sympathy for others. No role is given to...