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Play it again! A Natural Experiment on Reversibility Bias

Author

Listed:
  • Thomas Bassetti

    (Department of Economics and Management, University of Padova)

  • Stefano Bonini

    (Stevens Institute of Technology)

  • Fausto Pacicco

    (LIUC Università Carlo Cattaneo)

  • Filippo Pavesi

    (LIUC Università Carlo Cattaneo and Stevens Institute of Technology)

Abstract

Behavioral biases affect a large number of human decisions, many of which have relevant welfare effects. We identify a bias that we denote as "reversibility bias" and explore how the introduction of explicit exposure mechanisms can contribute to attenuate it. To do this, we exploit a unique natural experiment - the introduction of a decision review system represented by player challenges and the associated Hawk-Eye technology in professional tennis. This experiment allows us to identify the bias, by illustrating that if such a bias exists, the challenge rule should reduce the number of calls that postpone the assignment of a point. Our findings may have significant policy implications providing a conceptual framework for the design of institutions to alleviate the welfare costs associated with reversibility bias in different contexts, such as court rulings, human resource management and debt roll-over decisions.

Suggested Citation

  • Thomas Bassetti & Stefano Bonini & Fausto Pacicco & Filippo Pavesi, 2019. "Play it again! A Natural Experiment on Reversibility Bias," "Marco Fanno" Working Papers 0238, Dipartimento di Scienze Economiche "Marco Fanno".
  • Handle: RePEc:pad:wpaper:0238
    as

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    File URL: https://economia.unipd.it/sites/decon.unipd.it/files/20190238.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    prospect theory; natural experiment; uncertainty;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments

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