The Forgone-Option Fallacy
26 Pages Posted: 26 Nov 2014 Last revised: 12 Jun 2017
Date Written: June 12, 2017
Forgoing an option motivates decision makers to achieve outcomes that "justify" the initial choice. Analyzing a natural experiment in the National Football League, we find that forgoing an option motivates professional athletes to do no worse than they would have done had they taken the option in the first place. We complement this result with evidence from survey experiments.
Keywords: forgone options, reference points, loss aversion
JEL Classification: D03, D81, L83
Suggested Citation: Suggested Citation