Analyzing Individual Bracketing Behavior in Risk Aggregation Tasks

Enrico G. De Giorgi, Askhat Omar and Thierry Post
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Enrico G. De Giorgi: University of St. Gallen - SEPS: Economics and Political Sciences; Swiss Finance Institute
Askhat Omar: Nazarbayev University - Graduate School of Business
Thierry Post: Graduate School of Business of Nazarbayev University

No 26-24, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: A theoretical framework is developed to analyze individual bracketing behavior in risk aggregation tasks. The methodology is applied in a behavioral experiment with real financial incentives, using pairs of independent binomial gambles. Results reveal substantial variation in bracketing behavior across subjects, unrelated to demographics but linked to gamble risk profiles. A minority systematically applies Broad or Narrow Bracketing. In contrast, most subjects display Partial Bracketing with high variability, suggesting choice inconsistency rather than a systematic rule aimed at reducing cognitive burden or maximizing hedonic value.

Keywords: choice bracketing; individual decision-making; behavioral experiment (search for similar items in EconPapers)
JEL-codes: D12 D81 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2026-02
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Persistent link: https://EconPapers.repec.org/RePEc:chf:rpseri:rp2624

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