17. Mai 2011

DIW Applied Micro Seminar

Preference for consistency


17. Mai 2011


DIW Berlin im Quartier 110
Room 5.2.010
Mohrenstraße 58
10117 Berlin


Armin Falk, University of Bonn
Abstract: This paper studies how a "preference for consistency" can affect economic decision-making. We propose a two-period model of decision-making where people have a preference for consistency because consistent behavior allows them to signal personal and intellectual strength. This creates a trade-off between choosing according to their beliefs and reputational concerns. We then present three experiments that study main predictions and implications of the model. Results from the experiments suggest that preferences for consistency affect behavior in a systematic way and can provide a powerful channel of social influence.