Original title: Optimal illusion of control and related perception biases
Authors: Gossner, O. ; Steiner, Jakub
Document type: Research reports
Year: 2016
Language: eng
Series: CERGE-EI Working Paper Series, volume: 571
Abstract: We study perception biases arising under second-best perception strategies. An agent correctly observes a parameter that is payoff-relevant in many decision problems that she encounters in her environment but is unable to retain all the information until her decision. A designer of the decision process chooses a perception strategy that determines the distribution of the perception errors. If some information loss is unavoidable due to cognition constraints, then (under additional conditions) the optimal perception strategy exhibits the illusion of control, overconfidence, and optimism.
Keywords: decision problems; perception biases; perception strategies

Institution: Economics Institute AS ČR (web)
Document availability information: Fulltext is available at external website.
External URL: http://www.cerge-ei.cz/pdf/wp/Wp571.pdf
Original record: http://hdl.handle.net/11104/0261663

Permalink: http://www.nusl.cz/ntk/nusl-253915


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