Do past decisions influence future decisions?

Research output: Contribution to journalArticle

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Publication details

JournalApplied Economics Letters
DatePublished - 2013
Issue number3
Volume21
Pages (from-to)152-157
Original languageEnglish

Abstract

The random lottery incentive (RLI) mechanism (which involves subjects taking
many decisions, only a randomly chosen one of which determines the payment to the subject) is widely used in many experiments, and hence its validity is of
crucial importance to the inferences that can be drawn from the experiment. Its
validity has been investigated in two main ways: first, in simple experiments
where subjects were presented with just two decision problems, and second, in
experiments where subjects were presented with many problems. In the first set,
the hypothesis under test was whether the decisions made on the two problems
were connected; in the second set, whether the set of all (previous) decisions
affected the current decision. This article combines and extends these two ways
by investigating, in experiments with many questions, whether the immediately
preceding decision affects the current decision. This is a cognitively less demanding hypothesis than that all previous decisions are taken into account,
but allows for an indirect effect of previous decisions on current ones.
Reassuringly, we find little effect and hence our results complement the previous
evidence indicating that the RLI mechanism is robust and can safely be used.

    Research areas

  • contamination; experiments; nonexpected utility preferences; random lottery incentive mechanism; separation

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