When Choices are Mistakes

60 Pages Posted: 18 Nov 2019 Last revised: 1 Feb 2020

See all articles by Kirby Nielsen

Kirby Nielsen

Stanford University Department of Economics

John Rehbeck

Ohio State University (OSU) - Economics

Date Written: November 5, 2019

Abstract

Using a laboratory experiment, we identify whether decision makers consider it a mistake to violate canonical choice axioms. To do this, we incentivize subjects to report which of several axioms they want their decisions to satisfy. Then, subjects make lottery choices which might conflict with their stated axiom preferences. We give them the opportunity to re-evaluate their decisions when lotteries conflict with desired axioms. We find that a majority of individuals want to follow the axioms and revise their lottery choices to be consistent with them. We interpret this to mean that most axiom violations in our sample were mistakes.

Keywords: mistakes; rationality; normative versus descriptive theory; procedural decision making

JEL Classification: C90, D01, D60, D80

Suggested Citation

Nielsen, Kirby and Rehbeck, John, When Choices are Mistakes (November 5, 2019). Available at SSRN: https://ssrn.com/abstract=3481381 or http://dx.doi.org/10.2139/ssrn.3481381

Kirby Nielsen

Stanford University Department of Economics ( email )

United States

HOME PAGE: http://www.kirbyknielsen.com

John Rehbeck (Contact Author)

Ohio State University (OSU) - Economics ( email )

410 Arps Hall
1945 N. High St.
Columbus, OH 43210-1172
United States

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