Is There a Pessimistic Bias in Individual Beliefs? Evidence from a Simple Survey

Posted: 10 Dec 2006

See all articles by Selima Ben Mansour

Selima Ben Mansour

Université Paris Dauphine

Elyes Jouini

Univ. Paris Dauphine - CEREMADE

Clotilde Napp

CNRS and Université Paris-Dauphine ; IZA

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Abstract

It is an important issue for economic and finance applications to determine whether individuals exhibit a behavioral bias towards pessimism in their beliefs, in a lottery or more generally in an investment opportunities framework. In this paper, we analyze the answers of a sample of 1,540 individuals to the following question Imagine that a coin will be flipped 10 times. Each time, if heads, you win 10€. How many times do you think that you will win? The average answer is surprisingly about 3.9 which is below the average 5, and we interpret this as a pessimistic bias. We find that women are more pessimistic than men, as are old people relative to young. We also analyze how our notion of pessimism is related to more general notions of pessimism previously introduced in psychology.

Keywords: Pessimism, judged probability, lottery

Suggested Citation

Mansour, Selima Ben and Jouini, Elyes and Napp, Clotilde, Is There a Pessimistic Bias in Individual Beliefs? Evidence from a Simple Survey. Theory and Decision, Vol. 61, No. 4, December 2006, Available at SSRN: https://ssrn.com/abstract=950506

Selima Ben Mansour

Université Paris Dauphine

223 Rue Saint-Honore
Paris, 75775
France

Elyes Jouini (Contact Author)

Univ. Paris Dauphine - CEREMADE ( email )

Place du Marechal de Lattre de Tassigny
Paris Cedex 16, 75775
France
+ 33 1 44 05 46 75 (Phone)
+ 33 1 44 05 45 99 (Fax)

Clotilde Napp

CNRS and Université Paris-Dauphine ( email )

Place de Lattre de Tassigny
Paris, 75775
France

IZA ( email )

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