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A short note on the rationality of the false consensus effect

Vanberg, Christoph

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Abstract

In experiments which measure subjects’ beliefs, both beliefs about others’ behavior and beliefs about others’ beliefs, are often correlated with a subject’s own choices. Such phenomena have been interpreted as evidence of a causal relationship between beliefs and behavior. An alternative explanation attributes them to what psychologists refer to as a ‘false consensus effect’. It is my impression that the latter explanation is often prematurely dismissed because it is thought to be based on an implausible psychological bias. The goal of this note is to show that the false consensus effect does not rely on such a bias. I demonstrate that rational belief formation implies a correlation of behavior and beliefs of all orders whenever behaviorally relevant traits are drawn from an unknown common distribution. Thus, if we assume that subjects rationally update beliefs, correlations of beliefs and behavior cannot support a causal relationship.

Item Type: Working paper
Series Name: Discussion Paper Series / University of Heidelberg, Department of Economics
Volume: 0662
Place of Publication: Heidelberg
Date Deposited: 09 May 2019 13:00
Date: May 2019
Number of Pages: 6
Faculties / Institutes: The Faculty of Economics and Social Studies > Alfred-Weber-Institut for Economics
Subjects: 330 Economics
Uncontrolled Keywords: beliefs, behavioral economics, experimental economics
Schriftenreihe ID: Discussion Paper Series / University of Heidelberg, Department of Economics
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