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Separating True Preferences from Endogenous Effort and Cognitive Noise| title | Separating True Preferences from Endogenous Effort and Cognitive Noise |
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| start_date | 2023/12/08 |
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| schedule | 11h15-12h30 |
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| online | no |
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| location_info | 6th Floor Room |
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| summary | Preferences, skills, and other latent personal attributes (PSAs) are key drivers of inequalities in life outcomes. We propose a novel framework for quantifying, and accounting for, individuals’ effort and cognitive noise that confound decisions on PSA elicitation tasks. We establish the ability of our proposed framework to quantify the noise content of a given experimental design and to de-bias preference estimates in an application to a large-scale experimental dataset measuring risk preferences. While the two elicitation designs we study were used interchangeably in the past, we estimate that a change from the more complex design to the more intuitive one results in a 30% decrease in (rational) inattention. On the one hand, failure to properly account for decision errors results in estimates of risk preferences biased by 50% for the median individual. On the other hand, accounting for endogenous effort allows us to empirically reconcile competing models of discrete choice. Furthermore, the estimated individual effort propensities have external validity. We show that they capture low-stakes motivation which generalizes to other settings and predicts, inter alia, an individual’s performance on the highly influential PISA achievement test.***** Joint with Christian Belzil |
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| responsibles | Le Lec, Pejsachowicz |
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Workflow history| from state (1) | to state | comment | date |
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| submitted | published | | 2023/11/29 16:11 UTC |
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