Do people plan?
AbstractWe report the results of an experimental investigation of a key axiom of economic theories of dynamic decision making â namely, that agents plan. Inferences from previous investigations have been confounded with issues concerning the preference functionals of the agents. Here, we present an innovative experimental design which is driven purely by dominance: if preferences satisfy dominance, we can infer whether subjects are planning ahead. We implement two sets of experiments: the first (the Individual Treatment) in which the same player takes decisions both in the present and the future; and the second the Pairs Treatment) in which different players take decisions at different times. In both contexts, according to economic theory, the players in the present should anticipate the decision of the player in the future. We find that over half the participants in both experimental treatments do not appear to be planning ahead; moreover, their ability to plan ahead does not improve with experience. These findings identify an important lacuna in economic theories, both for individual behaviour and for behaviour in games.
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Bibliographic InfoArticle provided by Springer in its journal Experimental Economics.
Volume (Year): 12 (2009)
Issue (Month): 1 (March)
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Web page: http://www.springerlink.com/link.asp?id=102888
Planning; Backward induction; Dominance; Strategies; C91; C92; D81; D90;
Other versions of this item:
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
- C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- D90 - Microeconomics - - Intertemporal Choice - - - General
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:CitEc Project, subscribe to its RSS feed for this item.
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Levine's Working Paper Archive
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