TEC (Theory) Seminar: Kristóf Madarász, London School of Economics

Date and Time
Location
North Hall 2111

Speaker

Kristóf Madarász, London School of Economics

Title

"Projective Thinking: Model, Evidence, and Applications"

Abstract

We offer a parsimonious model of egocentric thinking by postulating a link between the extent to which people project their beliefs onto others and to which they anticipate others’ projecting onto them. We provide evidence for this link in higher-order beliefs and derive predictions of such projective thinking. In torts, judges’ excessive liability judgments are conjoint with agents’ under appreciation thereof. In dissent, people infer antagonistic preferences and the more costly dissent is, the more they conclude that the norm is genuinely popular. In trade, informed traders bluff too little, uninformed ones are cursed, and the predictions match the experimental evidence. Keywords: Cognition, Perspective Taking, Torts, Free Speech and Pluralistic Ignorance, Trade, Winner’s Curse, Under-Bluffing.