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Uncertainty causes rounding : an experimental study


Ruud, Paul A; Schunk, Daniel; Winter, Joachim K (2014). Uncertainty causes rounding : an experimental study. Experimental Economics, 17(3):391-413.

Abstract

Rounding is a common phenomenon when subjects provide an answer to an open-ended question, both in experimental tasks and in survey responses. From a statistical perspective, rounding implies that the measured variable is a coarsened version of the underlying continuous target variable. Since the coarsening process is non-random, inference from rounded data is generally biased. Despite the potentially severe consequences of rounding, little is known about its causes. In this paper, we focus on subjects' uncertainty about the target variable as one potential cause for rounding behavior. We present a novel experimental method that induces uncertainty in a controlled way, thus providing causal evidence for the effect of subjects' uncertainty on the extent of rounding. Then, we specify and estimate a mixture model that relates uncertainty and rounding. The results suggest that an increase in the exogenous level of uncertainty translates into higher variance of the subjects' beliefs, which in turn results in more rounding.

Abstract

Rounding is a common phenomenon when subjects provide an answer to an open-ended question, both in experimental tasks and in survey responses. From a statistical perspective, rounding implies that the measured variable is a coarsened version of the underlying continuous target variable. Since the coarsening process is non-random, inference from rounded data is generally biased. Despite the potentially severe consequences of rounding, little is known about its causes. In this paper, we focus on subjects' uncertainty about the target variable as one potential cause for rounding behavior. We present a novel experimental method that induces uncertainty in a controlled way, thus providing causal evidence for the effect of subjects' uncertainty on the extent of rounding. Then, we specify and estimate a mixture model that relates uncertainty and rounding. The results suggest that an increase in the exogenous level of uncertainty translates into higher variance of the subjects' beliefs, which in turn results in more rounding.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:National licences > 142-005
Dewey Decimal Classification:Unspecified
Uncontrolled Keywords:Economics, Econometrics and Finance (miscellaneous)
Language:English
Date:1 September 2014
Deposited On:07 Aug 2019 07:40
Last Modified:25 Sep 2019 00:38
Publisher:Springer
ISSN:1386-4157
OA Status:Green
Publisher DOI:https://doi.org/10.1007/s10683-013-9374-8
Related URLs:https://www.swissbib.ch/Search/Results?lookfor=nationallicencespringer101007s1068301393748 (Library Catalogue)

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