External and internal consistency of choices made in convex time budgets

Chakraborty, Anujit; Calford, Evan M.; Fenig, Guidon; Halevy, Yoram

doi:10.1007/s10683-016-9506-z

Cited by 22 publications

(13 citation statements)

References 25 publications

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“…Choice consistency has been tested in various domains, such as food choice (Bruyneel et al, 2012;Burghart et al, 2013;Camille et al, 2011;Harbaugh et al, 2001;Lazzaro et al, 2016), decisions under risk (Castillo et al, 2017;Choi et al, 2007Choi et al, , 2014Drichoutis & Nayga, 2017;Kim et al, 2018), intertemporal choice (Andreoni & Sprenger, 2012;Chakraborty et al, 2017;Kim et al, 2018), altruistic decisions (Andreoni & Miller, 2002) and moral intuitions (Barbato et al, 2017). However, direct cross-domain comparisons have not been attempted to date.…”

Section: Choice Domainmentioning

confidence: 99%

Keeping a cool head at all times. What determines choice consistency?

Nitsch¹,

Kalenscher²

2020

Preprint

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Many rational choice theories posit that rational decision makers assign subjective values to all available choice options and choose the option with highest subjective value. Choice options are usually composed of multiple attributes, e.g. healthiness and taste in dietary choice or risk and expected returns in financial choice. These attributes have to be integrated into a single subjective value. Subjective value maximizing choice requires choice consistency, i.e. consistent weighing of the choice attributes across choices. However, empirical work suggests that perfect choice consistency is often violated, for example when decision makers weigh choice attributes differently across multiple decisions. Some researchers propose to extend certain bounds of rationality or to abandon the concept of rationality as adherence to consistency principles altogether. A more conservative stance assumes that perfect consistency can be violated by decision makers in practice, but that consistency principles still can explain large parts of behavior. In a review of the recent literature, we identify factors for compromised consistency relative to baseline conditions. Broadly, we distinguish between undynamic trait factors and fluid state factors. We find evidence for an influence of age, education, intelligence, and neurological status. In contrast, choice consistency appears to be relatively robust to the influence of sex, personality traits, cognitive load, sleepiness and blood alcohol levels. We conclude, that, according to the current state of the literature, only fundamental differences in decision makers, that is, trait differences, have a significant impact on choice consistency. Keeping a cool head at all times. What determines choice consistency?Should you order one glass of champagne, a large Stein of Bavarian beer, or rather a nonalcoholic carafe of water? Choice theory posits that decision makers assign subjective values to all choice alternatives, rank order them according to their value, and choose the alternative with the highest value. The above example illustrates that choice alternatives are often composed of multiple attributes, e.g. magnitude (one glass, one carafe, one Stein), healthiness (alcoholic vs. non-alcoholic, sugar content etc.), subjective taste (the sourness of champagne vs. the bitterness of beer), cultural value or other components. Decision theory assumes that all of these attributes are integrated into a single subjective value. Importantly, the importance of taste as well as all other attributes is subjective and differs between individuals. Hence, in many decisions, there is no single best alternative. Instead, we have to deal with trade-offs of different choice attributes: In our diet we have to weigh taste, healthiness, magnitude or other factors. In financial decisions we have to weigh risk and expected returns, as well as the time until we can realize those returns. In such situations, our decisions depend on our individual preferences -so how can we measure decision making quality or r...

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Section: Choice Domainmentioning

confidence: 99%

Keeping a cool head at all times. What determines choice consistency?

Nitsch¹,

Kalenscher²

2020

Preprint

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“…Several other studies similarly …nd that matching tasks lead to lower inferred discount rates relative to choice tasks (Ahlbrecht and Weber, 1997;Read and Roelofsma, 2003). In examining MPL and CTB data, Chakraborty et al (2015) …nd that the two elicitation mechanisms produce di¤erent results.…”

Section: Solicits Bids Inmentioning

confidence: 81%

The impacts of elicitation mechanism and reward size on estimated rates of time preference

Meyer

2015

Journal of Behavioral and Experimental Economics

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[The Impact of Elicitation Mechanism and Reward Size on Estimated Rates of Time Preference] We run experiments with real monetary rewards ranging from $10 to $500 to estimate rates of time preference and test for hyperbolic discounting. Individuals become more patient with increasing reward sizes, which is consistent with a magnitude effect. This magnitude e¤ect is robust across speci…cations including a nonparametric analysis and structural maximum likelihood estimation. Subjects are divided between two di¤erent elicitation mechanisms (one a matching task and one a choice task) that should both theoretically provide an incentive for participants to reveal their true time preferences. We …nd some evidence of di¤erences between the rates from the matching and choice tasks but these di¤erences disappear when appropriately modeling the behavioral noise. We uncover little to no evidence of present-biased time preferences.

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“…Following Chakraborty et al (2015), we also test for demand monotonicity by comparing the number of interior versus corner allocations in the entire data set. The percentage of choice sets violating demand monotonicity never exceeds 11.5 percent and does not increase in the number of interior choices in a choice set (see Online Appendix Table B1).…”

Section: Description Of the Participant Samplementioning

confidence: 99%

“…Such violations are hence not a major concern in our data. Chakraborty et al (2015) perform three additional tests to analyze the internal and external consistency of data from convex time budgets: they test for the weak axiom of revealed preferences, wealth monotonicity, and impatience monotonicity. We do not have experimental variation to perform these three tests.…”

Section: Description Of the Participant Samplementioning

confidence: 99%

“…Finally, we discuss whether key features of the experimental design may have caused discrepancies between violations of stationarity and time consistency. A first potential limitation is that intertemporal allocations are elicited using convex time budgets, which have been questioned to yield valid choice patterns (Chakraborty et al, 2015). Our design does not include multiple price lists and does not vary experimental wealth or the delay between the sooner and the later payment date, so that we cannot test the weak axiom of revealed preferences, or test for wealth and impatience monotonicity, robustness checks proposed by Chakraborty et al Nevertheless, we showed in Section 3.3 that only few participants violate demand monotonicity, suggesting they have understood the convex time budget task.…”

Section: A2 Behavioral Mechanisms Iii: Experimental Factorsmentioning

confidence: 99%

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Be Patient When Measuring Hyperbolic Discounting: Stationarity, Time Consistency and Time Invariance in a Field Experiment

Janssens¹,

Kramer

Swart

2015

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractMost evidence of hyperbolic discounting is based on violations of either stationarity or time consistency as observed in choice experiments. These choice reversals may however also result from time-varying discount rates. Hyperbolic discounting is a plausible explanation for choice reversals only if violations of stationarity and time consistency overlap. Our field experiment examines the extent to which this is the case. At different points in time, the same participants allocated a future gift over sooner-smaller and later-larger rewards with varying front-end delays. We find that most violations of time consistency do not coincide with violations of stationarity. This is surprisingly similar to what an earlier experiment on stationarity, time invariance and time consistency finds using a different design among a different type of participants (Halevy, Econometrica, 2015). Random noise in decisionmaking alone does not explain this finding, given that we find a significant association between changes in household wealth and violations of stationarity and time consistency. We conclude that when incomes fluctuate, one can only identify hyperbolic discounting by eliciting violations of both stationarity and time consistency through a longitudinal design for the same subject pool.

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External and internal consistency of choices made in convex time budgets

Cited by 22 publications

References 25 publications

Keeping a cool head at all times. What determines choice consistency?

Keeping a cool head at all times. What determines choice consistency?

The impacts of elicitation mechanism and reward size on estimated rates of time preference

Be Patient When Measuring Hyperbolic Discounting: Stationarity, Time Consistency and Time Invariance in a Field Experiment

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