Revealing Choice Bracketing
Theoretical Economics
2024-03-12 v4
Abstract
Experiments suggest that people fail to take into account interdependencies between their choices -- they do not broadly bracket. Researchers often instead assume that people narrowly bracket, but existing designs do not test it. We design a novel experiment and revealed preference tests for how someone brackets their choices. In portfolio allocation under risk, social allocation, and induced-value shopping experiments, 40-43% of subjects are consistent with narrow bracketing and 0-16% with broad bracketing. Adjusting for each model's predictive precision, 74% of subjects are best described by narrow bracketing, 13% by broad bracketing, and 6% by intermediate cases.
Cite
@article{arxiv.2006.14869,
title = {Revealing Choice Bracketing},
author = {Andrew Ellis and David J. Freeman},
journal= {arXiv preprint arXiv:2006.14869},
year = {2024}
}