Censored Beliefs and Wishful Thinking
Fuente:
arXiv
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| Autores principales: | , |
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| Formato: | Preprint |
| Publicado: |
2024
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| Acceso en línea: | |
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| _version_ | 1866909467712421888 |
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| author | Burgh, Jarrod Melo, Emerson |
| author_facet | Burgh, Jarrod Melo, Emerson |
| contents | We present a model elucidating wishful thinking, which comprehensively incorporates both the costs and benefits associated with biased beliefs. Our findings reveal that wishful thinking behavior can be characterized as equivalent to superquantile-utility maximization within the domain of threshold beliefs distortion cost functions. By leveraging this equivalence, we establish WT as driving decision-makers to exhibit a preference for choices characterized by skewness and increased risk. Furthermore, we discuss how our framework facilitates the study of optimistic stochastic choice and optimistic risk aversion. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2402_01892 |
| institution | arXiv |
| publishDate | 2024 |
| record_format | arxiv |
| spellingShingle | Censored Beliefs and Wishful Thinking Burgh, Jarrod Melo, Emerson Theoretical Economics We present a model elucidating wishful thinking, which comprehensively incorporates both the costs and benefits associated with biased beliefs. Our findings reveal that wishful thinking behavior can be characterized as equivalent to superquantile-utility maximization within the domain of threshold beliefs distortion cost functions. By leveraging this equivalence, we establish WT as driving decision-makers to exhibit a preference for choices characterized by skewness and increased risk. Furthermore, we discuss how our framework facilitates the study of optimistic stochastic choice and optimistic risk aversion. |
| title | Censored Beliefs and Wishful Thinking |
| topic | Theoretical Economics |
| url | https://arxiv.org/abs/2402.01892 |