Prevalence and Determinants of Choice Bracketing - Experimental Evidence

Rudi Stracke, Rudolf Kerschbamer and Uwe Sunde

VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy from Verein für Socialpolitik / German Economic Association

Abstract: This paper investigates whether the timing of rewards affects behavior in multi-stage contests. Abstracting from discounting, theory predicts that it is irrelevant for behavior whether agents are immediately rewarded for succeeding on a particular stage, or whether the reward is delayed until the interaction on the subsequent stage is decided. When testing this prediction using a two-stage contest in lab experiments, we fnd that stage-2 efforts are identical in immediate and delayed reward treatments, while stage-1 effort is significantly lower if rewards are immediate. This difference can be explained by the salience of continuation values, which is strongly affected by the timing of rewards.

JEL-codes: C72 J33 M52 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-cbe, nep-exp, nep-gth and nep-hrm
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc15:113092

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