The Forgone-Option Fallacy

26 Pages Posted: 26 Nov 2014 Last revised: 12 Jun 2017

Etan A. Green

Wharton - Operations, Information and Decisions

Joshua Lewis

University of Pennsylvania, The Wharton School, Operations & Information Management Department, Students

Date Written: June 12, 2017

Abstract

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

Green, Etan A. and Lewis, Joshua, The Forgone-Option Fallacy (June 12, 2017). Available at SSRN: https://ssrn.com/abstract=2530623 or http://dx.doi.org/10.2139/ssrn.2530623

Etan A. Green (Contact Author)

Wharton - Operations, Information and Decisions ( email )

Philadelphia, PA 19104
United States

Joshua Lewis

University of Pennsylvania, The Wharton School, Operations & Information Management Department, Students ( email )

Philadelphia, PA 19104
United States

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