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Abstract
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This paper studies the impact of decision-making processes on individuals’ rationality and welfare. We theoretically and experimentally study a specific decision-making process, sequential elimination in which a decision-maker has to sequentially options that are least preferred in decision problems until only one option remains. First, we provide a simple necessary and sufficient condition that sequential elimination necessarily results in consistent choice while direct decision-making may not. Then we conduct an experiment to examine the treatment effect of sequential elimination on the choice consistency by comparing choice data in three treatment groups: direct decision-making, sequential elimination and process selection. We also have an incentivized choice revision stage in order to test decision makers' awareness of "mistake" in making choices. We also ask the participants' satisfaction with their choices and decision-making processes as criteria for welfare. We hypothesized decision makers who use sequential elimination have a higher level of consistency, less likely to change their choices and are more satisfied with their decisions.
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After
This paper studies the impact of decision-making processes on individuals’ rationality and welfare. We theoretically and experimentally study a specific decision-making process, sequential elimination in which a decision-maker has to sequentially eliminate options that are least preferred in the decision problem, one by one until only one option remains. First, we provide a necessary and sufficient condition that sequential elimination results in consistent choice while direct decision-making may not. Then we experiment to examine the treatment effect of sequential elimination on the choice consistency by comparing choice data in three treatment groups: direct decision-making, sequential elimination and process selection. We also have an incentive-compatible design in which participants can revise their choice to test decision makers' awareness of "mistake" in making choices. We also ask the participants' satisfaction with their choices and decision-making processes as criteria for welfare. We hypothesized decision makers who use sequential elimination have a higher level of consistency, less likely to change their choices and are more satisfied with their decisions. We control for preference for consistency, preference for consequentialism and sunk cost effects,
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Trial Start Date
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February 22, 2020
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March 03, 2020
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Trial End Date
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February 23, 2020
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March 13, 2020
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Last Published
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January 27, 2020 09:06 AM
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February 22, 2020 09:55 AM
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Intervention Start Date
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Before
February 22, 2020
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March 03, 2020
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Intervention End Date
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February 23, 2020
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March 13, 2020
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Experimental Design (Public)
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Before
We design an online experiment via Qualtrics, which will take approximately 40 minutes. The experiment consists of three sections. In Section 1, each participant has to make choices in economic decision problems, either with a randomly assigned decision-making process or with her preferred decision-making process. In Section 2, we have four tests to measure cognitive function, including the International Cognitive Ability Resource (ICAR), the cognitive reflection test (CRT), the Stroop Color and Word Test (SCWT) and the Sternberg task. In Section 3, we collect information about participants’ preference on rational choice and choice process. Lastly, we ask participants for their demographic information, including gender, nationality, age, English level, education level and field of study.
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After
We design an online experiment via Qualtrics, which will take approximately 40 minutes. We recruit participants from the Behavioral Experimental Sciences Laboratory (BESLab) in Barcelona. Participants will need to come to the lab and complete the experiment on Qualtrics in the lab. The experiment consists of three sections. In Section 1, each participant has to make choices in economic decision problems, either with a randomly assigned decision-making process or with her preferred decision-making process. In Section 2, we have four tests to measure cognitive function, including the International Cognitive Ability Resource (ICAR), the cognitive reflection test (CRT), the Stroop Color and Word Test (SCWT) and the Sternberg task. In Section 3, we collect information about participants’ preference for rational choice and choice process. Lastly, we ask participants for their demographic information, including gender, nationality, age, English level, education level and field of study.
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Secondary Outcomes (End Points)
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Our secondary outcomes are individuals' satisfactions with their choice and decision-making processes, and how many times that they change their choices.
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After
Our secondary outcomes include individuals' satisfaction with their choice and decision-making processes, choice frequencies, choice changes, awareness of mistake, first-order stochastic dominance, risk preference and elicited preference.
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Secondary Outcomes (Explanation)
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Before
We measure individuals' satisfactions by survey questions after their completions of choice tasks. Participants simply provide their subjective evaluations. We measure individuals' willingness to change their choice by using an incentivized design. There are two blocks, A and B, each consists of the same 20 decision problems. Participants do not know that Block A and B consist of the same decision problem before entering Block B. Depending on the treatments, in Block B, they are presented with their Block A chocies (or sequence of eliminated alternatives) and can make different choices (or eliminate alternatives differently). In the end, they are asked to only one of Block A and Block B for payment. We count the numbers of choices that differ in Block A and Block B as a measure of awareness of "mistake" in making choices.
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After
We measure individuals' satisfaction by survey questions after their completions of choice tasks. Participants simply provide their subjective evaluations of satisfaction with their choice and decision-making processes. We measure choice frequencies by computing the frequency of different choices in each menu in different treatment groups. We measure individuals' changes in choices by using an incentivized design. There are two blocks, A and B, each consists of the same 20 decision problems. Participants ex-ante do not know that Block A and B consist of the same decision problem before entering Block B. Depending on the treatments, in Block B, they are presented with their Block A choices (or sequence of eliminated alternatives) and can make different choices (or eliminate alternatives differently). In the end, they are asked to only one of Block A and Block B for payment. We count the number of choices that differ in Block A and Block B as a measure of awareness of "mistake" in making choices. We also check the violation first-order stochastic dominance in every menu. We will estimate risk-preference using the algorithm provided in Halevy, Persitz and Zrill (2018), We will elicit preference of each individual based on the method provided in Apesteguia and Ballester (2015).
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