Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/226305 
Year of Publication: 
2020
Series/Report no.: 
CESifo Working Paper No. 8603
Publisher: 
Center for Economic Studies and Ifo Institute (CESifo), Munich
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.
Subjects: 
time non-separable preferences
history dependence
stopping behaviour
chess.com
JEL: 
D90
C50
C13
D40
Document Type: 
Working Paper
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