Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/191274 
Year of Publication: 
2018
Series/Report no.: 
ifo Working Paper No. 269
Publisher: 
ifo Institute - Leibniz Institute for Economic Research at the University of Munich, Munich
Abstract: 
We investigate the trade-off between the opportunity costs of decisions and their quality in a simple model. In a lab experiment, we introduce exogenous variation in the opportunity costs of time. Contrary to claims in the previous literature, we show that using more time when making small-stake decisions does not indicate irrational behavior, and neither does a positive correlation between decision time and the probability of making mistakes. Such behavior is compatible with rational decisionmaking and our causal experimental evidence and, hence, does not imply that people behave fundamentally irrational when making observable decision errors under risk.
Subjects: 
decision under risk
time constraints
opportunity costs
rational behavior
lab experiment
structural estimation
drift diffusion model
JEL: 
C91
D01
D81
D83
D91
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.