Optimal Stopping in a Dynamic Salience Model

Markus Dertwinkel-Kalt () and Jonas Frey

No 8496, CESifo Working Paper Series from CESifo

Abstract: We study dynamic choice under risk through the lens of salience theory. We derive predictions on salient thinkers’ gambling decisions and strategy choices. We test our model experimentally and find support for all of our predictions. We also detect a strong correlation between static and dynamic choices, suggesting that salience theory can coherently explain risky choice in both static and dynamic contexts. Our results help to understand when people sell assets, stop gambling, enter the job market or retire.

Keywords: salience theory; skewness seeking; behavioural stopping (search for similar items in EconPapers)
JEL-codes: D01 D81 D90 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-mic and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_8496

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