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Habits as Adaptations: An Experimental Study

Ludmila Matyskova (), Brian Rogers, Jakub Steiner () and Keh-Kuan Sun

No 13300, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Psychologists emphasize two aspects of habit formation: (i) habits arise when the history of a decision process correlates with optimal continuation actions, and (ii) habits alleviate cognition costs. We ask whether serial correlation of optimal actions alone induces habits or if, instead, habits form as optimal adaptations. We compare lab treatments that differ in the information provided to subjects, holding fixed the serial correlation of optimal actions. We find that past actions affect behavior only in the treatment in which this habit is useful. The result suggests that caution is warranted when modeling habits via a fixed utility over action sequences.

Keywords: Habit formation; rational inattention (search for similar items in EconPapers)
JEL-codes: C91 D8 D9 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-exp and nep-upt
Date: 2018-11
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