Abstract
This study aims to test narrow bracketing in continuous choices and measure individuals' economic rationality using budgetary experiments within and between different frames. We conduct a within-subject laboratory experiment in which participants make 22 budgetary choices in each treatment. In the narrow frame, participants receive some initial risky points in the X account and the Y account, and distribute extra points between the two accounts. The total points depend on the sum of the initial points and the points distributed to each account. In the broad frame, participants instead directly choose the total points they want to receive from the X account and the Y account. Two frames are presented in random order at the individual level. Using revealed preference analysis based on Afriat’s Theorem, we measure economic rationality by assessing the consistency with utility maximization with each frame and across both frames combined. We also attempt to employ structural econometrics to estimate individual preferences under different model specifications and to quantify individuals’ degree of narrow bracketing, following Zheng and Zhou (2025)'s work published in Experimental Economics. This, in turn, allows us to conduct welfare analysis.