@techreport{25f8ce3c1c1b43ef8f973dee19e4a50a,

title = "Experimental Investigation of Percieved Risk in Random Walk Processes",

abstract = "The hypothesis that, on average, people accurately estimate probabilities in random walk processes is experimentally investigated.Individuals are confronted with a process that starts with $X, and in every stage either goes up or down by $1, with probabilities p and 1 - p respectively.For different values of p, individuals were asked to estimate what is the chance that after 10 stages the system will be at a point higher than or equal to $X.Systematic mistakes in estimations were observed.In particular, estimations were centered around the stage-by-stage probability (p) rather then around the actual probability. Implication of this result to random walk processes in finance is considered.",

keywords = "random walks, risk",

author = "U. Gneezy and J.W.M. Das",

note = "Pagination: 12",

year = "1996",

language = "English",

volume = "1996-85",

series = "CentER Discussion Paper",

publisher = "Econometrics",

type = "WorkingPaper",

institution = "Econometrics",

}