Working Paper
Subjective probabilities: psychological evidence and economic applications
Chiodo, Abbigail J.; Guidolin, Massimo; Owyang, Michael T.; Shimoji, Makoto (2003)
Real-life decision makers are often forced to estimate the likelihood of uncertain future events. Usually, economists assume that agents behave as though they are fully rational, employing statistical rules to assess probabilities, and that they maximize expected utility. Psychological studies, however, have shown that people tend not to adhere to these rationality postulates. We review three rules of thumb taken from the psychology literature that people have been shown to rely on when assessing the likelihood of uncertain events. We construct a simple model of belief formation that ...
Working Papers , Paper 2003-009

Journal Article
Subjective probabilities: psychological theories and economic applications
Owyang, Michael T.; Guidolin, Massimo; Shimoji, Makoto; Chiodo, Abbigail J. (2004-01)
Abbigail J. Chiodo, Massimo Guidolin, Michael T. Owyang, and Makoto Shimoji> Real-life decisionmakers are often forced to estimate the likelihood of uncertain future events. Usually, economists assume that these agents behave in a fully rational manner, employing statistical rules to assess probabilities, and that they maximize expected utility. Psychological studies, however, have shown that people do not tend to behave as rational models would predict. The authors review three rules of thumb taken from the psychology literature that people rely on when assessing the likelihood of uncertain ...
Review , Volume 86 , Issue Jan , Pages 33-48