Experiments on sequential decision-making: The ''irreversibility effect''

The Irreversibility Effect (IE) predicts that an expected utility maximizer who expects to obtain additional information before his future choices, will choose a ''more flexible'' (or ''less irreversible'') position in the current period. Results of an experimental investigation of the IE are presented. The aim of this study was to provide empirical evidence about the IE without making specific assumptions about the agents' behavior. Our results support the theoretical predictions and suggest that the IE is compatible with non-expected utility maximizing behavior.