RT Journal Article
T1 Alternation bias and sums of identically distributed monetary lotteries.
A1 Robles-Zurita, José Antonio
K1 Economía - Aspectos psicológicos
AB The alternation bias is the tendency of people to believe that random events alternate more often than statisticallaws imply. This paper examines the theoretical effect of this psychological bias on preferences over repeatedinvestments by using a model of the belief in the law of small numbers. An alternation bias agent (ABA) has adifferent perception to a rational agent (RA) about the outcome distribution of the sum of n realisations of alottery. The results show that an ABA, that maximises expected utility, could reject a single realisation of alottery while accepting several repetitions in accordance with Paul Samuelson's fallacy of large numbers.Furthermore, the explanation of this type of preference, based on the alternation bias, is compatible with previousbehavioural accounts. A more general result shows that the alternation bias increases (decreases) theexpected utility of the perceived sum of identically distributed lotteries if individuals are risk averse (risk seekers).
PB Elsevier
YR 2017
FD 2017-12-06
LK https://hdl.handle.net/10630/37098
UL https://hdl.handle.net/10630/37098
LA eng
NO Robles-Zurita, J. (2018). Alternation bias and sums of identically distributed monetary lotteries. Journal of behavioral and experimental economics, 72, 78-85.
NO https://openpolicyfinder.jisc.ac.uk/id/publication/32277
NO Spanish Ministry of Economy and Competitiveness (Proyecto código ECO2013-43526-R)
DS RIUMA. Repositorio Institucional de la Universidad de Málaga
RD 21 ene 2026