How Does Choice Affect Beliefs?

Beschreibung

People tend to think more favorably about a product when they own it compared to when they do not own it. Going beyond the effect of ownership, we study in the lab how choosing –as opposed to simply receiving – a product affects beliefs about the products in the choice set.Using a between-subject design, we compare a person who chooses a product to a person who receives the same product exogenously. To deal with the endogeneity in choices we construct information that is sufficient to make choices predictable but noisy enough to leave room for belief formation. We find that making a choice increases the difference between beliefs about the same product when the product is owned compared to when it is not. The effect is driven by pessimism about not chosen products: participants who do not choose a product believe it is worse than participants who do not receive it, while beliefs about chosen and received products are similar. When participants choose a product but their attention is shifted towards product evaluation,pessimism disappears suggesting that the effect of choice is driven by attention.As choices are often made under uncertainty, the mechanism we identify may play a role in a potentially wide range of settings. Our findings also have policy implications: active choice policies may be more effective tools than opt-out defaults.

Zeitraum	24 Juni 2021 → 25 Juni 2021
Ereignistitel	Annual Meeting of the Austrian Economic Association
Veranstaltungstyp	Keine Angaben
Bekanntheitsgrad	National