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 and Growth - - - General
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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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.
- Esteban F. Klor & Sebastian Kube & Eyal Winter & Ro'i Zultan, 2011.
"Can Higher Bonuses Lead to Less E ort? Incentive Reversal in Teams,"
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786969000000000073, David K. Levine.
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Open Access publications from University of Toulouse 1 Capitole
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wp347, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
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- Ondrej Rydval & Andreas Ortmann & Michal Ostatnicky, 2007. "Three Very Simple Games and What It Takes to Solve Them," Jena Economic Research Papers 2007-092, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
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