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  5. Underestimating Learning by Doing

American Economic Journal:
Microeconomics

ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)

Underestimating Learning by Doing

  • Samantha Horn
  • George Loewenstein
American Economic Journal: Microeconomics (Forthcoming)

Abstract

Many economic decisions, such as whether to invest in developing new skills, change professions, or purchase a technology, benefit from accurate estimation of skill acquisition. We examine the accuracy of such predictions by having study participants predict the speed at which they will master unfamiliar tasks. Across three studies involving two types of tasks and two levels of difficulty, we find systematic underestimation of learning, even after receiving feedback. In a fourth study, participants predicting others' performance showed significantly less underestimation, suggesting that projection bias–over-reliance on immediate perceptions of effort and difficulty–may drive prediction errors.

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