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Belief updating among college students: evidence from experimental variation in information


Abstract: We investigate how college students form and update their beliefs about future earnings using a unique ?information? experiment. We provide college students true information about the population distribution of earnings and observe how this information causes respondents to update their beliefs about their own future earnings. We show that college students are substantially misinformed about population earnings and logically revise their self-beliefs in response to the information we provide, with larger revisions when the information is more specific and is good news. We classify the updating behaviors observed and find that the majority of students are non-Bayesian updaters.

Keywords: Prediction (Psychology); Wages; Universities and colleges; Demography; Uncertainty; Bayesian statistical decision theory;

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Provider: Federal Reserve Bank of New York

Part of Series: Staff Reports

Publication Date: 2011

Number: 516