Spiegler, Ran;
(2022)
On the behavioral consequences of reverse causality.
European Economic Review
, 149
, Article 104258. 10.1016/j.euroecorev.2022.104258.
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Abstract
Reverse causality is a common attribution error that distorts the evaluation of private actions and public policies. This paper explores the implications of this error when a decision maker acts on it and therefore affects the very statistical regularities from which he draws faulty inferences. Applying the Bayesian-network approach of Spiegler (2016), I explore the equilibrium effects of a certain class of reverse-causality errors, in the context of an example with a quadratic-normal parameterization. I show that the decision context may protect the decision maker from his own reverse-causality error. That is, the cost of reverse-causality errors can be lower for everyday decision makers than for an outside observer who evaluates their choices.
| Type: | Article |
|---|---|
| Title: | On the behavioral consequences of reverse causality |
| Open access status: | An open access version is available from UCL Discovery |
| DOI: | 10.1016/j.euroecorev.2022.104258 |
| Publisher version: | https://doi.org/10.1016/j.euroecorev.2022.104258 |
| Language: | English |
| Additional information: | This version is the author accepted manuscript. For information on re-use, please refer to the publisher’s terms and conditions. |
| Keywords: | Social Sciences, Economics, Business & Economics, Reverse causality, Bayesian networks, Causal models, Non-rational expectations, EQUILIBRIUM, DISCRETION, MODEL |
| UCL classification: | UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics UCL > Provost and Vice Provost Offices > UCL SLASH UCL |
| URI: | https://discovery-pp.ucl.ac.uk/id/eprint/10156131 |
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