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Reference-dependent choice bracketing
Last registered on September 10, 2020

Pre-Trial

Trial Information
General Information
Title
Reference-dependent choice bracketing
RCT ID
AEARCTR-0006419
Initial registration date
September 10, 2020
Last updated
September 10, 2020 10:10 AM EDT
Location(s)

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Primary Investigator
Affiliation
HU Berlin
Other Primary Investigator(s)
Additional Trial Information
Status
In development
Start date
2020-09-15
End date
2020-10-31
Secondary IDs
Abstract
I derive a simple and generally applicable theoretical model of choice bracketing from two behavioral axioms on top of expected utility. The first behavioral axiom establishes a direct link between narrow bracketing and correlation neglect. The second behavioral axiom identifies the reference point as the place where broad and narrow preferences are connected. The narrow bracketer is characterized by an inability to process changes from the reference point in different dimensions simultaneously. As a result, her trade-offs between dimensions are distorted. While she disregards interactions between actual outcomes, she appreciates these interactions mistakenly with respect to the reference point. Since the narrow bracketer’s ability to think multidimensionally is preserved at the reference point, my model resolves the general incompatibility of narrow bracketing and budget balance. Furthermore, it allows me to isolate the effects of narrow bracketing in the absence of loss-aversion. Finally, the model reveals a connection between narrow bracketing and the use of budgeting heuristics. In addition to the theoretical contribution, I present the results of an experiment to test the predictions and underlying assumptions of my model.
External Link(s)
Registration Citation
Citation
Vorjohann, Pauline. 2020. "Reference-dependent choice bracketing." AEA RCT Registry. September 10. https://doi.org/10.1257/rct.6419-1.0.
Experimental Details
Interventions
Intervention(s)
I compare behavior in equivalent decision problems within subject across two treatments. One treatment (broad treatment) presents the attributes of outcomes jointly while the other treatment (narrow treatment) presents the attributes of outcomes separately.
Intervention Start Date
2020-09-15
Intervention End Date
2020-09-18
Primary Outcomes
Primary Outcomes (end points)
Willingness to pay (WTP) for portfolios
Primary Outcomes (explanation)
Secondary Outcomes
Secondary Outcomes (end points)
Secondary Outcomes (explanation)
Experimental Design
Experimental Design
I conduct an online laboratory experiment. In the experiment I elicit willingness to pay (WTP) for portfolios via choice lists. Portfolios consist of two assets, a blue asset and an orange asset. Depending on the outcome of a coin toss by the computer the blue and orange asset yield blue and orange point earnings respectively. I compare WTP for equivalent portfolios within subject across two treatments. In one treatment (broad treatment) the blue and orange asset of the portfolio are presented jointly while in the other treatment (narrow treatment) participants can view the blue and orange asset of the portfolio only separately.
Experimental Design Details
Not available
Randomization Method
Computer
Randomization Unit
Individual
Was the treatment clustered?
No
Experiment Characteristics
Sample size: planned number of clusters
200 Individuals
Sample size: planned number of observations
200 Individuals
Sample size (or number of clusters) by treatment arms
200 Individuals per treatment arm (within-subject design)
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
See the pre-analysis plan.
IRB
INSTITUTIONAL REVIEW BOARDS (IRBs)
IRB Name
IRB Approval Date
IRB Approval Number
Analysis Plan

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