Munich Personal RePEc Archive

Judgments of length in the economics laboratory: Are there brains in choice?

Duffy, Sean and Gussman, Steven and Smith, John (2019): Judgments of length in the economics laboratory: Are there brains in choice?

[img] PDF
MPRA_paper_93126.pdf

Download (230kB)

Abstract

We design a choice experiment where the objects are valued according to only a single attribute with a continuous measure and we can observe the true preferences of subjects. However, subjects have an imperfect perception of their own preferences. Subjects are given a choice set involving several lines of various lengths and are told to select one of them. They strive to select the longest line because they are paid an amount that is increasing in the length of their selection. Subjects also make their choices while they are required to remember either a 6-digit number (high cognitive load) or a 1-digit number (low cognitive load). We find that subjects in the high load treatment make inferior line selections and perform worse searches. When we restrict attention to the set of viewed lines, we find evidence that subjects in the high load treatment make worse choices than subjects in the low load treatment. Therefore the low quality searches do not fully explain the low quality choices. Our results suggest that cognition affects choice, even in our idealized choice setting. We also find evidence of choice overload even when the choice set is small and the objects are simple. Further, our experimental design permits a multinomial discrete choice analysis on choice among single-attribute objects with an objective value. The results of our analysis suggest that the errors in our data are better described as having a Gumbel distribution rather than a normal distribution. Finally, we observe the effects of limited cognition, consistent with memory decay and attention.

UB_LMU-Logo
MPRA is a RePEc service hosted by
the Munich University Library in Germany.