This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

Repeated Games with Present-Biased Preferences

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Hector Chade () (W. P. Carey School of Business Department of Economics)
Pavlo Prokopovych (University of Michigan)
Lones Smith (University of Michigan)

Additional information is available for the following registered author(s):

Abstract

We study infinitely repeated games with observable actions, where players have present-biased (so-called (beta)-(delta)) preferences. We give a two-step procedure to characterize Strotz-Pollak equilibrium payoffs: compute the continuation payoff set using recursive techniques, and use this set to characterize the equilibrium payoff set U(beta,delta). While Strotz-Pollak equilibrium and subgame perfection differ here, the generated paths and payoffs do coincide.

We then explore the cost of the present-time bias. Fixing the total present value of 1 util flow, lower (beta) or higher (delta) shrinks the payoff set. Surprisingly, unless the minimax outcome is a Nash equilibrium of the stage game, the equilibrium payoff set U(beta, delta) is not monotonic in (beta) or (delta). While the set U(beta, delta) is contained in that of a standard repeated game with greater discount factor, the present-time bias precludes any lower bound on U(beta, delta) that would easily generalize the (beta) = 1 folk-theorem.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://wpcarey.asu.edu/tools/mytools/pubs_admin/FILES/cps2.pdf
File Format:
File Function:
Download Restriction: no

Publisher Info
Paper provided by Department of Economics, W. P. Carey School of Business, Arizona State University in its series Working Papers with number 2173938.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length:
Date of creation:
Date of revision:
Handle: RePEc:asu:wpaper:2173938

Contact details of provider:
Postal: Box 873806, Tempe, AZ 85287-3806
Phone: (602) 965-5514
Fax: (602) 965-0748
Email:
Web page: http://repec.wpcarey.asu.edu/RePEc/asu/
More information through EDIRC

For technical questions regarding this item, or to correct its listing, contact: (Steve Salik).

Related research
Keywords:

Other versions of this item:

This paper has been announced in the following NEP Reports: References listed on IDEAS
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.:
  1. Abreu, Dilip & Pearce, David & Stacchetti, Ennio, 1986. "Optimal cartel equilibria with imperfect monitoring," Journal of Economic Theory, Elsevier, vol. 39(1), pages 251-269, June. [Downloadable!] (restricted)
  2. Krusell, Per & Kuruscu, Burhanettin & Smith Jr., Anthony A, 2001. "Equilibrium Welfare and Government Policy with Quasi-Geometric Discounting," CEPR Discussion Papers 2693, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  3. Jonathan Gruber & Botond Koszegi, 2000. "Is Addiction "Rational"? Theory and Evidence," NBER Working Papers 7507, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  4. Jonathan Gruber & Botond Köszegi, 2001. "Is Addiction "Rational"? Theory And Evidence," The Quarterly Journal of Economics, MIT Press, vol. 116(4), pages 1261-1303, November. [Downloadable!] (restricted)
  5. Laibson, David, 1997. "Golden Eggs and Hyperbolic Discounting," The Quarterly Journal of Economics, MIT Press, vol. 112(2), pages 443-77, May.
  6. Kocherlakota, Narayana R., 1996. "Reconsideration-Proofness: A Refinement for Infinite Horizon Time Inconsistency," Games and Economic Behavior, Elsevier, vol. 15(1), pages 33-54, July. [Downloadable!] (restricted)
  7. Goldman, Steven M, 1980. "Consistent Plans," Review of Economic Studies, Blackwell Publishing, vol. 47(3), pages 533-37, April. [Downloadable!] (restricted)
  8. Ted O'Donoghue & Matthew Rabin, 1999. "Doing It Now or Later," American Economic Review, American Economic Association, vol. 89(1), pages 103-124, March. [Downloadable!] (restricted)
  9. Peleg, Bezalel & Yaari, Menahem E, 1973. "On the Existence of a Consistent Course of Action when Tastes are Changing," Review of Economic Studies, Blackwell Publishing, vol. 40(3), pages 391-401, July. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, 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.)

  1. Zafer Akin, 2008. "Imperfect Information Processing in Sequential Bargaining Games with Present Biased Preferences," Working Papers 0810, TOBB University of Economics and Technology, Department of Economics. [Downloadable!]
    Other versions:
Statistics
Access and download statistics

Did you know? Over five million full texts a year are downloaded through IDEAS.

This page was last updated on 2009-11-19.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.