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Analyzing Individual Bracketing Behavior in Risk Aggregation Tasks

Author

Listed:
  • Enrico G. De Giorgi

    (University of St. Gallen - SEPS: Economics and Political Sciences; Swiss Finance Institute)

  • Askhat Omar

    (Nazarbayev University - Graduate School of Business)

  • Thierry Post

    (Graduate School of Business of Nazarbayev University)

Abstract

A theoretical framework is developed to analyze individual bracketing behavior in risk aggregation tasks. The methodology is applied in a behavioral experiment with real financial incentives, using pairs of independent binomial gambles. Results reveal substantial variation in bracketing behavior across subjects, unrelated to demographics but linked to gamble risk profiles. A minority systematically applies Broad or Narrow Bracketing. In contrast, most subjects display Partial Bracketing with high variability, suggesting choice inconsistency rather than a systematic rule aimed at reducing cognitive burden or maximizing hedonic value.

Suggested Citation

  • Enrico G. De Giorgi & Askhat Omar & Thierry Post, 2026. "Analyzing Individual Bracketing Behavior in Risk Aggregation Tasks," Swiss Finance Institute Research Paper Series 26-24, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp2624
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    File URL: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5427941
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    Keywords

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    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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