منابع مشابه
Exponential Growth Bias and Household Finance
We document two widespread biases in how consumers perceive the costs and benefits of borrowing and saving, and explore the implications of these biases for household finance. Payment/interest bias is the systematic tendency to underestimate a loan interest rate given other loan terms. Future value bias is the systematic tendency to underestimate a future value given a present value, time horiz...
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Exponential Growth Bias and Financial Literacy The tendency to underestimate the future value of a variable growing at a constant rate, an example of exponential growth bias, has been linked to household financial decision making. We show that exponential growth bias and standard measures of financial literacy are negatively correlated in a representative sample of Swedish adults. Since financi...
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Evidence from psychology and economics indicates that many individuals overestimate their ability, both absolutely and relatively. We test three different theories about observed relative overconfidence. The first theory notes that simple statistical comparisons (for example, whether the fraction of individuals rating own skill above the median value is larger than half) are compatible (Benôıt ...
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Accurate assessments of one’s abilities are important in many domains. These assessments, e.g, form the basis for the choice of education, or the wage one is asking in wage negotiations. Evidence from psychology and economics indicates that many individuals seem to overestimate their ability. These results are typically taken as evidence that individuals are overconfident in their abilities. Re...
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This paper analyzes whether individuals who have been well trained to apply exponential discounting and compound interest calculations in simple savings scenarios are also successful in dealing with exponential effects in more complicated debt scenarios. In an experimental study, involving 251 German undergraduate business students, we find strong evidence of an “amortization bias”, a tendency ...
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ژورنال
عنوان ژورنال: Journal of Economic Psychology
سال: 2017
ISSN: 0167-4870
DOI: 10.1016/j.joep.2016.11.001