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TESTING COMMITMENT COST THEORY IN CHOICE EXPERIMENTS
Author(s) -
Bazzani Claudia,
Caputo Vincenzina,
Nayga Rodolfo M.,
Canavari Maurizio
Publication year - 2017
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/ecin.12377
Subject(s) - economics , context (archaeology) , microeconomics , certainty , test (biology) , transaction cost , willingness to pay , decision theory , econometrics , prospect theory , mathematical economics , mathematics , paleontology , geometry , biology
In choice experiments, it is commonly assumed that individuals make choices in static and certainty decision‐making conditions. Real‐world choices, however, are usually made in a dynamic setting. Committing a purchase decision under conditions of uncertainty might have a “Commitment Cost” (CC). In this study, we test CC theory using a nonhypothetical choice experiment. Specifically, we test whether choice behavior and willingness to pay estimates differ when individuals have the option to gain present or delayed information or reverse the transaction. Our results suggest that the construction of a dynamic decision context can be relevant in the design of choice experiments. ( JEL C90, C93, Q18)