Weekly Seminar

Joshua Miller

Bocconi

19-Apr-2013

Seminar 3 – 14:30

Abstract

We provide experimental evidence that subjects blame others for events they are not responsible for. An agent chooses between a lottery and a safe asset for a principal who then decides how much to allocate between the agent and a third party. We observe widespread blame: agents are blamed by principals for the outcome of the lottery, an event they are not responsible for. We provide an explanation of this apparently irrational behavior with a delegated-expertise principal-agent model, the subjects’ salient perturbation of the environment. By guaranteeing individual accountability, blame can be rationalized as part of a normative morality. The “Hot Hand,” has been defined as the commonly held belief that basketball players sometimes exhibit positive statistical autocorrelation in made shots. The consensus among economists, throughout the last 30 years of related research, is that this widespread belief in the hot hand is a cognitive illusion; that in reality basketball shooting is adequately modeled by an i.i.d Bournoulli process. Since the belief in the hot hand persists among highly trained experts who have large economic incentives to predict performance accurately, these results imply a rather unlikely level of irrationality. We address validity issues present in previous studies and create an experimental design that improves substantially on earlier designs by creating a more controlled shooting environment in which to test whether sequences of basketball shots are consistent with an i.i.d Bournoulli process. We find that our shooters´ data is not consistent with an i.i.d Bournoulli process; rather they contain clear patterns of positive statistical autocorrelation. These results provide evidence that the belief in the hot hand is not a cognitive illusion.

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