Can People Learn About ‘Black Swans’? Experimental Evidence

How do people cope with tail risk? In a lab experiment that removed informational and incentive confounds, subjects overwhelmingly behaved like Bayesian learners. The results of simulations further revealed that if one is to survive under tail risk, one needs to follow the Bayesian approach, as all boundedly rational alternatives fail. These findings support the Bayesian assumption commonly made in prior studies on tail risk and model uncertainty, and they also demonstrate the importance of optimal learning under tail risk

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Year of publication:	2018
Authors:	Payzan Le Nestour, Elise
Publisher:	[2018]: [S.l.] : SSRN
Subject:	Experiment \| Lernprozess \| Learning process \| Risiko \| Risk \| Bayes-Statistik \| Bayesian inference \| Anlageverhalten \| Behavioural finance

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