Real People Aggregating Signals: An Experiment and a Short Story (joint work with Michael Richter)
A decision maker observes multiple signals about an event. He has information about the frequency of the event given each individual signal and wishes to update his beliefs about the event. We examine the problem experimentally and identify some of the commonly used procedures for signal aggregation. These procedures are for the most part inconsistent with Bayesian updating. We apply some of these procedures to a well-known panel game that has previously been studied under the standard Bayesian assumptions and find that the properties of the equilibria differ significantly.