Cognitive Abilities and Behavioral Biases


Oechssler, Jörg ; Roider, Andreas ; Schmitz, Patrick W.


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URL: http://ub-madoc.bib.uni-mannheim.de/2073
URN: urn:nbn:de:bsz:180-madoc-20738
Document Type: Working paper
Year of publication: 2008
Publication language: English
Institution: School of Law and Economics > Sonstige - Fakultät für Rechtswissenschaft und Volkswirtschaftslehre
MADOC publication series: Sonderforschungsbereich 504 > Rationalitätskonzepte, Entscheidungsverhalten und ökonomische Modellierung (Laufzeit 1997 - 2008)
Subject: 330 Economics
Classification: JEL: J24 D90 D80 C91 ,
Subject headings (SWD): Befangenheit , Kognitive Kompetenz , Investitionsentscheidung
Keywords (English): behavioral finance , biases , cognitive abilities , cognitive reflection test
Abstract: We use a simple, three-item test for cognitive abilities to investigate whether established behavioral biases that play a prominent role in behavioral economics and finance are related to cognitive abilities. We find that higher test scores on the Cognitive Reflection Test of Frederick (2005) indeed are correlated with lower incidences of the conjunction fallacy, conservatism in updating probabilities, and overconfidence. Test scores are also significantly related to subjects' time and risk preferences. We find no influence on anchoring. However, even if biases are lower for people with higher cognitive abilities, they still remain substantial.
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Das Dokument wird vom Publikationsserver der Universitätsbibliothek Mannheim bereitgestellt.




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Oechssler, Jörg ; Roider, Andreas ; Schmitz, Patrick W. (2008) Cognitive Abilities and Behavioral Biases. Open Access [Working paper]
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