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Imperfect Recall and Time Inconsistencies: An experimental test of the absentminded driver "paradox"

Author

Listed:
  • Vittoria M. Levati

    (Max Planck Institute of Economics, Strategic Interaction Group, Jena, Germany)

  • Matthias Uhl

    (Max Planck Institute of Economics, Strategic Interaction Group, Jena, Germany)

  • Ro'i Zultan

    (Max Planck Institute of Economics, Strategic Interaction Group, Jena, Germany)

Abstract

Absentmindedness is a special case of imperfect recall which according to Piccione and Rubinstein (1997a) leads to time inconsistencies. Aumann, Hart and Perry (1997a) question their argument and show how dynamic inconsistencies can be resolved. The present paper explores this issue from a descriptive point of view by examining the behavior of absentminded individuals in a laboratory environment. Absentmindedness is manipulated in two ways. In one treatment, it is induced by cognitively overloading participants. In the other, it is imposed by randomly matching decisions with decision nodes in the information set. The results provide evidence for time inconsistencies in all treatments. We introduce a behavioral principal, which best explains the data.

Suggested Citation

  • Vittoria M. Levati & Matthias Uhl & Ro'i Zultan, 2010. "Imperfect Recall and Time Inconsistencies: An experimental test of the absentminded driver "paradox"," Jena Economics Research Papers 2010-035, Friedrich-Schiller-University Jena.
    • Handle: RePEc:jrp:jrpwrp:2010-035
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    References listed on IDEAS

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    More about this item

    Keywords

    imperfect recall; absentmindedness; dynamic inconsistency; experiment;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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