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Call It a Day: History Dependent Stopping Behavior

Author

Listed:
  • Ala Avoyan
  • Robizon Khubulashvili
  • Giorgi Mekerishvili

Abstract

In this paper, we provide evidence of history-dependent stopping behavior. Using data from an online chess platform, we estimate a dynamic discrete choice model in which an agent may have time non-separable preferences over the stochastic outcomes of their actions. We show that the agent’s decisions cannot be reconciled in a model with time separable preferences and that there is substantial heterogeneity in preferences across players. In particular, there are two types of people: those who get discouraged by a loss and stop, and others, who get encouraged by failure and keep playing until a win. We show how to leverage the information about an agent’s type in market design to achieve various welfare goals. A counterfactual analysis demonstrates that a matching algorithm that incorporates stopping behavior can significantly increase the length of play.

Suggested Citation

  • Ala Avoyan & Robizon Khubulashvili & Giorgi Mekerishvili, 2020. "Call It a Day: History Dependent Stopping Behavior," CESifo Working Paper Series 8603, CESifo.
    • Handle: RePEc:ces:ceswps:_8603
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    File URL: https://www.cesifo.org/DocDL/cesifo1_wp8603.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    time non-separable preferences; history dependence; stopping behaviour; chess.com;
    All these keywords.

    JEL classification:

    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General
    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General

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