Read this amusing story in a recent paper by Gennaioli and Shleifer (2010, forthcoming QJE):
In 1972, during New York primaries, Senator George McGovern of South Dakota was courting the Jewish vote, trying to demonstrate his sympathy for Israel. As Richard Reeves wrote for New York magazine in August, ‘During one of McGovern’s first trips into the city he was walked through Queens by city councilman Matthew Troy and one of their first stops was a hot dog stand. “Kosher?” said the guy behind the counter, and the prairie politician looked even blanker than he usually does in big cities. “Kosher!” Troy coached him in a husky whisper. “Kosher and a glass of milk,” said McGovern.'
The paper itself presents a model of heuristic judgment under uncertainty where agents depart from the fully-rational Bayesian benchmark. Here is how the authors summarize the paper:
The central assumption of the model is that, in the first instance, information retrieval from memory is both limited and selective. Some, but not all, of the missing scenarios come to mind of the decision maker. Moreover, the hypothesis in question primes the selective retrieval of scenarios from memory, with those most predictive of the hypothesis itself relative to the other hypotheses – the representative scenarios -- being retrieved first. In many situations, such intuitive judgment works well, and does not lead to large biases in probability assessments. But in situations where the representativeness and likelihood of scenarios diverge, intuitive judgment becomes faulty.
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