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Habits as adaptations: An experimental study

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  • Matysková, Ludmila
  • Rogers, Brian
  • Steiner, Jakub
  • Sun, Keh-Kuan

Abstract

When observable cues correlate with optimal choices, habit-driven behavior can alleviate cognition costs. We experimentally study the degree of sophistication in habit formation and cue selection. To this end, we compare lab treatments that differ in the information provided to subjects, holding fixed the serial correlation of optimal actions. We find that a particular cue – own past action – affects behavior only in treatments in which this habit is useful. The result suggests that caution is warranted when modeling habits via a fixed non-separable utility. Despite this sophistication, lab behavior also reveals myopia in information acquisition.

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  • Matysková, Ludmila & Rogers, Brian & Steiner, Jakub & Sun, Keh-Kuan, 2020. "Habits as adaptations: An experimental study," Games and Economic Behavior, Elsevier, vol. 122(C), pages 391-406.
    • Handle: RePEc:eee:gamebe:v:122:y:2020:i:c:p:391-406
    DOI: 10.1016/j.geb.2020.04.013
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    Cited by:

    1. Bartosz Maćkowiak & Filip Matějka & Mirko Wiederholt, 2023. "Rational Inattention: A Review," Journal of Economic Literature, American Economic Association, vol. 61(1), pages 226-273, March.

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    More about this item

    Keywords

    Habit formation; Rational inattention;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • D9 - Microeconomics - - Micro-Based Behavioral Economics

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