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Habits as Adaptations: An Experimental Study

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  • Steiner, Jakub
  • Matyskova, Ludmila
  • Rogers, Brian
  • Sun, Keh-Kuan

Abstract

Psychologists emphasize two aspects of habit formation: (i) habits arise when the history of a decision process correlates with optimal continuation actions, and (ii) habits alleviate cognition costs. We ask whether serial correlation of optimal actions alone induces habits or if, instead, habits form as optimal adaptations. We compare lab treatments that differ in the information provided to subjects, holding fixed the serial correlation of optimal actions. We find that past actions affect behavior only in the treatment in which this habit is useful. The result suggests that caution is warranted when modeling habits via a fixed utility over action sequences.

Suggested Citation

  • Steiner, Jakub & Matyskova, Ludmila & Rogers, Brian & Sun, Keh-Kuan, 2018. "Habits as Adaptations: An Experimental Study," CEPR Discussion Papers 13300, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:13300
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    Cited by:

    1. Bartosz Maćkowiak & Filip Matějka & Mirko Wiederholt, 2023. "Rational Inattention: A Review," Journal of Economic Literature, American Economic Association, vol. 61(1), pages 226-273, March.

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    More about this item

    Keywords

    Habit formation; Rational inattention;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • D9 - Microeconomics - - Micro-Based Behavioral Economics

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