Revealing Choice Bracketing

Experiments suggest that people fail to take into account interdependencies between their choices-they do not broadly bracket. Researchers often instead assume people narrowly bracket, , but existing designs do not test it. We design a novel experiment and revealed preference tests for how someone brackets their choices. In portfolio allocation under risk, , social allocation, , and induced-value shopping experiments, , 40-43 percent of subjects are consistent with narrow bracketing, and 0-16 percent with broad bracketing. Adjusting for each model's predictive precision, , 74 percent of subjects are best described by narrow bracketing, , 13 percent by broad bracketing, , and 6 percent by intermediate cases. ( JEL D12, D81, D91) )