Revealing choice bracketing

Andrew Ellis and David Freeman

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Experiments suggest that people fail to take into account interdependencies between their choices—they do not broadly bracket. Researchers often instead assume people narrowly bracket, but existing designs do not test it. We design a novel experiment and revealed preference tests for how someone brackets their choices. In portfolio allocation under risk, social allocation, and induced-value shopping experiments, 40–43 percent of subjects are consistent with narrow bracketing, and 0–16 percent with broad bracketing. Adjusting for each model's predictive precision, 74 percent of subjects are best described by narrow bracketing, 13 percent by broad bracketing, and 6 percent by intermediate cases.

Keywords: AAM; requested (search for similar items in EconPapers)
JEL-codes: D12 D81 D91 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2024-09-20
New Economics Papers: this item is included in nep-cbe, nep-dcm, nep-exp and nep-upt
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Published in American Economic Review, 20, September, 2024, 114(9), pp. 2668 - 2700. ISSN: 0002-8282

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http://eprints.lse.ac.uk/125470/ Open access version. (application/pdf)

Related works:
Journal Article: Revealing Choice Bracketing (2024)
Working Paper: Revealing Choice Bracketing (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:125470

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