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Choice, Deferral and Consistency

Author

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  • Miguel Costa-Gomes
  • Carlos Cueva
  • Georgios Gerasimou

    ()

  • Matus Tejiscak

Abstract

We conduct a novel experiment in which subjects are forced to choose one of several real goods in one treatment, but are not forced to choose, and can instead incur a small cost to defer choice, in the other treatment. We find that forcing subjects to choose, which is the convention in choice experiments, leads to relatively higher rates of choice reversals. This implies that standard choice experiments may lead researchers to overestimate the fraction of subjects that do not maximize a stable and transitive preference relation. We then use a new combinatorial-optimization method that detects a subject’s possibly incomplete (due to indecisiveness) or truncated (due to undesirability) preferences by minimizing the number of switches to her active choices and/or choice deferrals that are necessary to generate behavior consistent with maximization of such preferences. Slightly above one half of our subjects' decisions are best explained by such preferences or by a Bayesian preference for information, whereas the rest are best explained by standard utility maximization.

Suggested Citation

  • Miguel Costa-Gomes & Carlos Cueva & Georgios Gerasimou & Matus Tejiscak, 2014. "Choice, Deferral and Consistency," Discussion Paper Series, Department of Economics 201416, Department of Economics, University of St. Andrews, revised 26 Dec 2016.
  • Handle: RePEc:san:wpecon:1416
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    File URL: http://www.st-andrews.ac.uk/~wwwecon/repecfiles/4/1416.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Georgios Gerasimou, 2016. "Asymmetric dominance, deferral, and status quo bias in a behavioral model of choice," Theory and Decision, Springer, vol. 80(2), pages 295-312, February.
    2. repec:eee:jetheo:v:170:y:2017:i:c:p:417-425 is not listed on IDEAS
    3. repec:wsi:wschap:9789813235816_0005 is not listed on IDEAS
    4. repec:kap:theord:v:83:y:2017:i:3:d:10.1007_s11238-017-9600-5 is not listed on IDEAS
    5. Gerasimou, Georgios, 2015. "Indecisiveness, Undesirability and Overload Revealed Through Rational Choice Deferral," MPRA Paper 67290, University Library of Munich, Germany.

    More about this item

    Keywords

    Choice deferral; choice reversals; indecisiveness; unattractiveness; revealed preference; Houtman-Maks;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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