In this paper, we introduce Definitivity Avoidance, a behavioral bias that induces individuals to inefficiently shy away from choices that involve a final judgment. We model its effects and explore how the introduction of explicit exposure mechanisms can contribute to attenuate them. Using a unique natural experiment - the introduction of a technology-assisted review system in professional tennis - we test the model predictions and confirm the relevance of this behavioral bias in a competitive setting. Possible instances of definitivity avoidance can be identified in multiple contexts such as debt roll-over decisions, inefficient asset allocations, court rulings, and child adoptions. The broad applicability of our model carries relevant policy implications as it provides a conceptual framework for the design of institutions to alleviate the welfare costs associated with definitivity avoidance.
Play it again! A Natural Experiment on Definitivity Avoidance
Thomas Bassetti
;
2020
Abstract
In this paper, we introduce Definitivity Avoidance, a behavioral bias that induces individuals to inefficiently shy away from choices that involve a final judgment. We model its effects and explore how the introduction of explicit exposure mechanisms can contribute to attenuate them. Using a unique natural experiment - the introduction of a technology-assisted review system in professional tennis - we test the model predictions and confirm the relevance of this behavioral bias in a competitive setting. Possible instances of definitivity avoidance can be identified in multiple contexts such as debt roll-over decisions, inefficient asset allocations, court rulings, and child adoptions. The broad applicability of our model carries relevant policy implications as it provides a conceptual framework for the design of institutions to alleviate the welfare costs associated with definitivity avoidance.File | Dimensione | Formato | |
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Tennis_Paper.pdf
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