Abstract:

We study, theoretically and experimentally, the role of selective memory in shaping probability judgments.  In our model hypotheses and data act as cues that retrieve experiences from the memory database based on three regularities in human recall: frequency, similarity with the cue, and interference. We show that under different conditions the model produces: over and underestimation of unlikely events, underestimation of heterogeneous hypotheses, partition dependence, over and underreaction to data.  The model also produces belief heterogeneity from the same experiences and links it to heterogeneity in recall.  Experimental evidence confirms these predictions.

For information or to receive the invitation link contact: elisur.magrini@unibocconi.it