The False Consensus Effect: Deconstruction and Reconstruction of an Anomaly

We present a striking example of the deconstruction and reconstruction of an anomaly. In line with previous experiments we show in a one-shot setting that the allegedly robust false consensus e¤ect disappears when representative information is readily available. But the e¤ect reappears if a small cognitive effort is required to retrieve the information. Most subjects apparently ignore valuable information if it is not handed on a silver platter. We conclude that the relevance of the false consensus e¤ect depends on the difficulty of the information retrieval and that the underlying mechanism is an information processing deficiency rather than egocentricity

Opinions on Tax Deductions and the Consensus Effect in a Survey-Experiment

We present the results of a survey-experiment using a representative sample of the Dutch population in which we relate respondents' opinion about the tax deductibility of mortgages to their estimates about other people's opinion.The experiment employs three treatment variables: monetary incentives, the provision of arguments pro and contra, and ambiguity of the question posed.We find that respondents are characterized by a significant consensus effect.Respondents estimates of others opinions are strongly related to their own opinion.The size of the effect, however, is not affected by ambiguity of the question posed. Information by means of the provision of arguments pro and contra the tax provision does reduce the consensus effect significantly, though.Monetary incentives appear to have only a weak effect.We also find a strong effect of house ownership.Not only are house owners more in favor of the tax provision, they are also characterized by a significantly stronger consensus effect.These results suggest that both cognitive factors and motivational factors are responsible for the consensus effect.consensus effect;experiment;survey;taxation

Testing guilt aversion with an exogenous shift in beliefs

We conduct a laboratory experiment to test whether subjects tend to meet the expectations of others (the guilt aversion hypothesis). The specificity of our approach is that second order beliefs are manipulated exogenously just by changing the parameters of the experimental game. In particular, we consider a simple communication game where the sender is perfectly informed about his material benefit from lying to the receiver. At the same time, the receiver knows only the ex-ante distribution of the sender's material incentives. By changing this distribution between the experimental treatments, we achieve an exogenous variation in the receiver's payoff expectations (and hence in the corresponding sender's second-order beliefs) while keeping the sender's actual material incentives fixed. The results show that the rate of lying is significantly lower when the receiver is supposed to have higher payoff expectations, however only in the case when the monetary incentives for lying are fixed at a moderate level. (C) 2016 Elsevier Inc. All rights reserved

Testing guilt aversion with an exogenous shift in beliefs

We conduct a laboratory experiment to test whether subjects tend to meet the expectations of others (the guilt aversion hypothesis). The specificity of our approach is that second-order beliefs are manipulated exogenously just by changing the parameters of the experimental game. In particular, we consider a simple communication game where the sender is perfectly informed about his material benefit from lying to the receiver. At the same time, the receiver knows only the ex-ante distribution of the sender's material incentives. By changing this distribution between the experimental treatments, we achieve an exogenous variation in the receiver's payoff expectations (and hence in the corresponding sender's second-order beliefs) while keeping the sender's actual material incentives fixed. The results show that the rate of lying is significantly lower when the receiver is supposed to have higher payoff expectations, however only in the case when the monetary incentives for lying are fixed at a moderate level

Opinions on Tax Deductions and the Consensus Effect in a Survey-Experiment

We present the results of a survey-experiment using a representative sample of the Dutch population in which we relate respondents' opinion about the tax deductibility of mortgages to their estimates about other people's opinion.The experiment employs three treatment variables: monetary incentives, the provision of arguments pro and contra, and ambiguity of the question posed.We find that respondents are characterized by a significant consensus effect.Respondents estimates of others opinions are strongly related to their own opinion.The size of the effect, however, is not affected by ambiguity of the question posed. Information by means of the provision of arguments pro and contra the tax provision does reduce the consensus effect significantly, though.Monetary incentives appear to have only a weak effect.We also find a strong effect of house ownership.Not only are house owners more in favor of the tax provision, they are also characterized by a significantly stronger consensus effect.These results suggest that both cognitive factors and motivational factors are responsible for the consensus effect.

Investing Attributes in Real Estate Investment Trusts

Recently, studies on behavioral finance have gained interest among academicians. The study of investors' behavioral perspective is deemed important to understand the decision-making process pertaining to investment. Decision making processes involve factors that influence investor's behavior to invest. Various topics and areas have been discussed to further understand the behavior of investors. However, only a few researches have actually been conducted in the area of behavioral finance resulting in a lack of conclusive findings. Findings gained thus far are insufficient to specifically identify investors' intention to invest in certain investment portfolios. Therefore, the objective of this paper was to identify the factors that influence investor's behavior to invest in Real Estate Investment Trusts (REITs). This paper reviews literatures on factors that influence investors' decision-making process and proposes a model of influencing factors. The findings from this paper would aid and facilitate future research on investors' behavior to invest in REITs. This paper is expected to add to the current literature on behavioral finance of REITs

Biased beliefs and imperfect information

We perform an experiment designed to assess the accuracy of beliefs about characteristics and decisions. Subjects are asked to declare beliefs typically formed through real world experiences. They are then asked to report beliefs concerning other individuals from the same environment. We test two main hypotheses: (i) whether for items not perfectly observable, individuals suffer from some type of biased beliefs; (ii) whether this bias is reduced when information is more readily available. We find a powerful and ubiquitous bias in perceptions that is “self-centered” in the sense that those at extremes tend to perceive themselves as closer to the middle of the distribution than is the case. This bias does not completely disappear when the information is more readily available. We present evidence from our experiment that limited attention and self-serving deception can provide explanations for this bias and present important economic applications