Call It a Day: History Dependent Stopping Behavior

Ala Avoyan, Robizon Khubulashvili and Giorgi Mekerishvili

No 8603, CESifo Working Paper Series from CESifo

Abstract: In this paper, we provide evidence of history-dependent stopping behavior. Using data from an online chess platform, we estimate a dynamic discrete choice model in which an agent may have time non-separable preferences over the stochastic outcomes of their actions. We show that the agent’s decisions cannot be reconciled in a model with time separable preferences and that there is substantial heterogeneity in preferences across players. In particular, there are two types of people: those who get discouraged by a loss and stop, and others, who get encouraged by failure and keep playing until a win. We show how to leverage the information about an agent’s type in market design to achieve various welfare goals. A counterfactual analysis demonstrates that a matching algorithm that incorporates stopping behavior can significantly increase the length of play.

Keywords: time non-separable preferences; history dependence; stopping behaviour; chess.com (search for similar items in EconPapers)
JEL-codes: C13 C50 D40 D90 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-cbe, nep-gth and nep-ore
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_8603

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