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In-class exercise

In-class exercise#

Note

Please respect the time limits. Of course you do not need to set a timer, but it is important that you make it to the very end.

The tasks refer to “Correlation Neglect in Belief Formation” (Enke and Zimmermann, 2019).

Be prepared to present/discuss each of the following questions in class. You should designate group members for each of the subtasks (e.g., task 1 / example 1, task 2 / question 1, etc.) such that everybody is prepared to take a lead on at least one of these subtasks.

Task 1: Introduction (30min, same for all groups)#

  1. Give an example (not contained in the paper) for an economically relevant setting where people are exposed to correlated information.

  2. Describe in your own words the basic idea underlying the experimental design of the paper (Correlated vs Uncorrelated treatment). How can we identify correlation neglect with such a design (think about the comparison of beliefs between the Correlated and the Uncorrelated treatment)?

  3. A different approach in terms of experimental design would be to design the correlated and uncorrelated treatment in a way such that people who fully neglect correlations in the correlated treatment state the same beliefs as subjects in the uncorrelated treatment. Think about the pros and cons of such an approach.

Task 2: Skim through section 3 (for all groups)#

Do not try to understand everything. However, you should be able to follow the corresponding discussions.

Task 3-1: (60min)#

  1. Think about the evidence presented in 2.4.3 that correlation neglect is associated with cognitive ability.

    Describe an experimental design that would allow you to provide causal evidence that cognitive ability causally influences correlation neglect.

  2. Compare the low complexity correlated treatment (section 3.1) with the correlated treatment.

    What key differences do you see between the treatments?

    What can we infer/learn from this treatment comparison?

Task 3-2: (60min)#

  1. Describe the framework outlined in section 3.2 in your own words.

  2. Provide an example—different from updating based on correlated information—where this framework could be applied

  3. Explain why the low complexity treatments (section 3.1) are not helpful in identifying which steps of reasoning in this framework are driving correlation neglect.

Task 3-3: (60min)#

  1. Describe in your own words the many stimuli treatment (section 3.3.1) and the underlying design idea of that treatment.

  2. Suppose you would want to design treatments that allow you to directly analyse whether the mathematical complexity plays a role in generating correlation neglect.

    Can you make a suggestion for how such treatments could look like?

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