The DOI matches its Crossref record; 3 of the 3 references it cites were found in a registry or an index.
Inference by Believers in the Law of Small Numbers
Open accessAbstract
People exaggerate the degree to which small samples resemble the population from which they are drawn. To model this belief in the “Law of Small Numbers,” I assume that a person exaggerates the likelihood that a short sequence of i.i.d. signals resembles the long-run rate at which those signals are generated. Such a person believes in the “gambler's fallacy,” thinking that early draws of one signal increase the odds of next drawing other signals. When uncertain about the rate, the person overinfers from short sequences of signals that the rate is more extreme than it is, and consequently infers that there is more variation in these rates among different sources than there is. Economic applications are discussed, such as how the model predicts that investors will believe in nonexistent variation in the quality of mutual-fund managers.
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Citations
Cites
Judgment under Uncertainty: Heuristics and Biases
Tversky, A., & Kahneman, D. (1975) · Utility, Probability, and Human Decision Making · doi:10.1007/978-94-010-1834-0_8 · Cited by 22,650
On the psychology of prediction.
Kahneman, D., & Tversky, A. (1973) · Psychological Review · doi:10.1037/h0034747 · Cited by 6,202
Belief in the law of small numbers.
Tversky, A., & Kahneman, D. (1971) · Psychological Bulletin · doi:10.1037/h0031322 · Cited by 3,246
Cited by
Maps of Bounded Rationality: Psychology for Behavioral Economics
Kahneman, D. (2003) · American Economic Review · doi:10.1257/000282803322655392 · Cited by 5,377
Behavioral development economics
Kremer, M., Rao, G., & Schilbach, F. (2019) · Handbook of Behavioral Economics: Applications and Foundations 1 · doi:10.1016/bs.hesbe.2018.12.002 · Cited by 188
Combining Human Expertise with Artificial Intelligence: Experimental Evidence from Radiology
Agarwal, N., Moehring, A., Rajpurkar, P., & Salz, T. (2023) · doi:10.2139/ssrn.4505053 · Cited by 161
Combining Human Expertise with Artificial Intelligence: Experimental Evidence from Radiology
Agarwal, N., Moehring, A., Rajpurkar, P., & Salz, T. (2023) · doi:10.3386/w31422 · Cited by 161
Pathological choice: the neuroscience of gambling and gambling addiction
Clark, L., Averbeck, B., Payer, D., Sescousse, G., Winstanley, C. A., & Xue, G. (2013) · The Journal of Neuroscience · doi:10.1523/jneurosci.3231-13.2013 · Cited by 116
Metadata
- Authors
- Rabin, M.
- Venue
- The Quarterly Journal of Economics
- Publisher
- Oxford University Press (OUP)
- Published
- 2002-08-01
- Volume
- 117
- Issue
- 3
- Pages
- 775-816
- ISSN
- 0033-5533 (ISSN-L)
- 1531-4650
- OpenAlex
- W1601629022
- Cited by
- 663
- References
- 3
- FWCI
- 11.41
- Type
- journal article
- Language
- en
- Open access
- green
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