While they usually should, people do not revise their beliefs more to expert (economist) opinion than to lay opinion. The present research sought to better understand the factors that make it more likely for an individual to change their mind when faced with the opinions of expert economists versus the general public. Across five studies we examined the role that overestimation of knowledge plays in this behavior. We replicated the finding that people fail to privilege the opinion of experts over the public across two different (Study 1) and five different (Study 5) economic issues. We further find that undermining an illusion of both topic-relevant (Studies 2–4) and -irrelevant knowledge (Studies 3 and 4) leads to greater normative belief revision in response to expert rather than lay opinion. We suggest one reason that people fail to revise their beliefs more in response to experts is because people think they know more than they really do.

People typically overestimate how much others are prepared to pay for consumer goods and services. We investigated the extent to which latent beliefs about others’ affluence contribute to this overestimation. In Studies 1, 2a, and 2b we found that participants, on average, judge the other people taking part in the study to “have more money” and “have more disposable income” than themselves. The extent of these beliefs positively correlated with the overestimation of willingness to pay (WTP). Study 3 shows that the link between income-beliefs and WTP is causal, and Studies 4, 5a, and 5b show that it holds in a between-group design with a real financial transaction and is unaffected by accuracy incentives. Study 6 examines estimates of others’ income in more detail and, in conjunction with the earlier studies, indicates that participants’ reported beliefs about others’ affluence depend upon the framing of the question. Together, the data indicate that individual differences in the overestimation effect are partly due to differing affluence-beliefs, and that an overall affluence-estimation bias may contribute to the net tendency to overestimate other people’s willingness to pay.

This research investigated how different forms of overconfidence correlate with age. Contrary to stereotypes that young people are more overconfident, the results provide little evidence that overestimation of one’s performance or overplacement of one’s performance relative to that of others is correlated with age. Instead, the results suggest that precision in judgment (confidence that one knows the truth) increases with age. This result is strongest for probabilistic elicitations, and not present in quantile elicitations or reported confidence intervals. The results suggest that a lifetime of experience, rather than leading to better calibration, instead may increase our confidence that we know what we’re talking about.

The problem initially considered is that of testing whether ρ = 0 in a model y(n) = x(n)+ η (n), x(n) = ρx(n – 1) + ξ (n) where only y(n) is observed and η (n), ξ (n) are white noise. This is equivalent to distinguishing between an ARMA (1, 1) model and white noise. The asymptotic distribution of the likelihood ratio criterion is derived. This is shown to be of an unusual form. This result is then used to discuss the asymptotic properties of Akaike's procedure for estimating (p, q) in an ARMA (p, q) model. If p0, q0 are the true values and p0 < P, q0< Q, when P, Q are the maximum values considered, then it is shown that, in a certain asymptotic sense, the procedure is sure to overestimate p0, q0. However, the asymptotic situation may be very far from that relevant in a practical case. The relevance of overestimation is briefly discussed.