Are Contingent Choices Consistent?

Banerjee, Priyodorshi and Das, Tanmoy (2015): Are Contingent Choices Consistent?

Abstract

A contingent plan is consistent if the specification for any particular contingency in the plan is invariant to the set of alternative contingencies or, equivalently, is independent of irrelevant information emerging from alternative contingencies or choice problems. Our experiments show that consistency may be obtainable when choice problems are complete, with monetary and immediate outcomes, but is likely to face violation in more complex settings. We further found that decisions are more likely to change when irrelevant information arises rather than subsides, and that any observed failure of consistency has the use of irrelevant information in decision-making at its core.

• Item Type: MPRA Paper
• Language: English
• Keywords: contingent plans, consistent choices, irrelevant information and decision making
• Subjects: C - Mathematical and Quantitative Methods > C9 - Design of Experiments > C91 - Laboratory, Individual Behavior; D - Microeconomics > D0 - General > D01 - Microeconomic Behavior: Underlying Principles; D - Microeconomics > D0 - General > D03 - Behavioral Microeconomics: Underlying Principles; D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D81 - Criteria for Decision-Making under Risk and Uncertainty; G - Financial Economics > G1 - General Financial Markets > G11 - Portfolio Choice ; Investment Decisions

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