| Abstract: |
Standard choice experiments are hampered by the fact that utility is either
unknown or imperfectly measured by experimenters. As a consequence, the
inferences available to researchers are limited. By contrast, 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. Subjects have an imperfect perception of the choice objects but can
improve the precision of their perception with cognitive effort. 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 increases with the length of their choice. Our design
allows us to observe the search history, the response times, and make
unambiguous conclusions about the optimality of choices. We find a negative
relationship between the demanding nature of the choice problems and the
likelihood that subjects select the optimal lines. We also find a positive
relationship between the demanding nature of the choice problems and the
response times. However, we find evidence that suboptimal choices are
associated with longer response times than are optimal choices. This result
appears to be consistent with Fudenberg, Strack, and Strzalecki (2018).
Additionally, our experimental design permits a multinomial discrete choice
analysis. Our results suggest that the errors in our data are better described
as having a Gumbel distribution rather than a normal distribution. We also
observe effects consistent with memory decay and attention. Finally, we find
evidence that choices in our experiment exhibit the independence from
irrelevant alternatives (IIA) property. |