Most operations models assume individuals make decisions based on a perfect understanding of random variables or stochastic processes. In reality, however, individuals are subject to cognitive limitations and make systematic errors. We leverage established psychology on sample naivete to model...

For two periods an expert E announces his forecast of the state to a decision-maker D who chooses action. They disagree about the precision of the probability assessments. At the end of period 1 the state is observed. In the last period E makes announcements more extreme than his forecasts....