An experiment on aspiration-based choice

Abstract

This paper experimentally studies the influence of aspirations on choice. Motivated by the theoretical model of Guney et al. (2015), we consider choice problems which may include unavailable alternatives. In a choice problem, an aspiration is the most desired alternative there (available or not). In our design, we endogenously derive both aspirations and a subjective similarity notion that operates between an aspiration and other alternatives. We find that (i) choice reversals are more likely when an unavailable aspiration alternative is added into the environment than when an unavailable non-aspiration alternative is added, (ii) an available option is more likely to be chosen when there is an unavailable aspiration that is similar to it compared to when there is no such option in the environment, (iii) choices are better explained by a similarity-based procedure when the subjective similarity notion that is derived in a separate part of the experiment is used rather than the Euclidean distance.