The Roommate’s Dilemma: An Experimental Analysis of Choice Bracketing in Games

 Abstract      

A subject brackets two decisions if she “choose[s] an option in each case without full regard to the other” (Rabin and Weizsäcker, 2009).  Although in most situations such behaviour is unlikely to be optimal, it is well documented in experiments where subjects make decisions in the absence of strategic considerations.  This paper uses an economic experiment to investigate whether subjects also bracket their decisions in games.  Subjects played two Volunteer’s Dilemmas (the “Roommate’s Dilemma”) at the same time, with the payoffs from both games added to their earnings.  In a lottery task, subjects were generally revealed to be risk-averse narrow bracketers.  Aggregate play in the Roommate’s Dilemma is not consistent with predictions made by assuming all subjects either narrowly or broadly bracket.  On the individual level, structural modelling suggests that most subjects bracket narrowly in the game.