Premium
Second‐Best Considerations in Correcting Cognitive Biases
Author(s) -
Besharov Gregory
Publication year - 2004
Publication title -
southern economic journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.762
H-Index - 58
eISSN - 2325-8012
pISSN - 0038-4038
DOI - 10.1002/j.2325-8012.2004.tb00620.x
Subject(s) - regret , overconfidence effect , cognitive bias , offset (computer science) , behavioral economics , psychology , cognition , cognitive psychology , economics , confirmation bias , social psychology , computer science , microeconomics , machine learning , neuroscience , programming language
Studies in psychology and behavioral economics have found that decision‐making is replete with cognitive biases. Using examples of time inconsistency, regret, and overconfidence, this article investigates the implications for correcting biases of how they may offset each other. If only some biases are known, even correction of all known biases has ambiguous effects. With costly correction, the presence of some biases may be optimal. Further, if the correct decision is unknown, then the presence of biases does not imply that decision‐making is suboptimal.