Do People Plan?
AbstractWe report the results of an experimental investigation of a key axiom of economic theories of dynamic decision making – 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 InfoPaper provided by Department of Economics, University of York in its series Discussion Papers with number 06/22.
Date of creation: Nov 2006
Date of revision: Jul 2007
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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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-07-27 (All new papers)
- NEP-CBE-2007-07-27 (Cognitive & Behavioural Economics)
- NEP-EXP-2007-07-27 (Experimental Economics)
- NEP-UPT-2007-07-27 (Utility Models & Prospect Theory)
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- John Bone & John Hey & John Suckling, 2003. "Do people plan ahead?," Applied Economics Letters, Taylor and Francis Journals, vol. 10(5), pages 277-280.
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