Behavioral Patterns and Reduction of Sub-Optimality: An Experimental Choice Analysis

49 Pages Posted: 17 Oct 2017

See all articles by Daniela Di Cagno

Daniela Di Cagno

LUISS, Rome

Arianna Galliera

Catholic University of the Sacred Heart of Milan

Werner Güth

Max Planck Institute for Research on Collective Goods; Luiss Guido Carli University

Noemi Pace

Ca Foscari University of Venice - Department of Economics

Date Written: October 12, 2017

Abstract

This paper attempts to identify behavioral patterns and compare their average success considering several criteria of bounded rationality. Experimentally observed choice behavior in various decision tasks is used to assess heterogeneity in how individual participants respond to 15 randomly ordered portfolio choices, each of which is experienced twice. Treatments differ in (not) granting probability information and in (not) eliciting aspirations. Since in our setting neither other regarding concerns nor risk attitude matter and probability of the binary chance move is (optimal) choice-irrelevant, categorizing decision types relies on parameter dependence and choice adaptations. We find that most participants reduce systematically sub-optimality when following the identified criteria.

Keywords: (Un)Bounded Rationality, Satisficing, Experiments, Heterogeneity

JEL Classification: D03, D81, C91

Suggested Citation

Di Cagno, Daniela and Galliera, Arianna and Güth, Werner and Pace, Noemi, Behavioral Patterns and Reduction of Sub-Optimality: An Experimental Choice Analysis (October 12, 2017). Available at SSRN: https://ssrn.com/abstract=3054393 or http://dx.doi.org/10.2139/ssrn.3054393

Daniela Di Cagno

LUISS, Rome ( email )

00162 Rome, Roma
Italy

HOME PAGE: http://www.luiss.it/facolta/insegnamenti/curriculu

Arianna Galliera

Catholic University of the Sacred Heart of Milan ( email )

Largo Gemelli, 1
Via Necchi 9
Milan, MI 20123
Italy

Werner Güth

Max Planck Institute for Research on Collective Goods

Kurt-Schumacher-Str. 10
D-53113 Bonn, 53113
Germany

Luiss Guido Carli University ( email )

Via O. Tommasini 1
Rome, Roma 00100
Italy

Noemi Pace (Contact Author)

Ca Foscari University of Venice - Department of Economics ( email )

Cannaregio 873
Venice, 30121
Italy

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