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Do People Plan?

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  • John Bone
  • John D Hey
  • John Suckling

Abstract

We 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 or not. We implement three sets of experiments: the first two (the Individual Treatments) in which the same player takes decisions both in the present and the future; and the third (the Pairs Treatment) in which different players take decisions at different times. The two Individual treatments differed in that, in one, the subjects played sequentially, while, in the other, the subjects had to pre-commit to their future move. In all 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 all three experimental treatments do not appear to be planning ahead; moreover, their ability to plan ahead does not improve with experience, except possibly when we force subjects to pre-commit to their future decision. These findings identify an important lacuna in economic theories, both for individual behaviour and for behaviour in games.

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Bibliographic Info

Paper provided by Department of Economics, University of York in its series Discussion Papers with number 07/31.

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Date of creation: Nov 2007
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Handle: RePEc:yor:yorken:07/31

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  1. Cubitt, Robin P & Starmer, Chris & Sugden, Robert, 1998. "Dynamic Choice and the Common Ratio Effect: An Experimental Investigation," Economic Journal, Royal Economic Society, vol. 108(450), pages 1362-80, September.
  2. John D. Hey, 2002. "Experimental Economics and the Theory of Decision Making Under Risk and Uncertainty," The Geneva Risk and Insurance Review, Palgrave Macmillan, vol. 27(1), pages 5-21, June.
  3. T. Randolph Beard & Richard O. Beil, 1994. "Do People Rely on the Self-Interested Maximization of Others? An Experimental Test," Management Science, INFORMS, vol. 40(2), pages 252-262, February.
  4. John D. Bone & John D. Hey & John R. Suckling, 2003. "Do people plan ahead?," Applied Economics Letters, Taylor & Francis Journals, vol. 10(5), pages 277-280, April.
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As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Many people do not plan ahead
    by Economic Logician in Economic Logic on 2009-11-06 15:59:00
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Cited by:
  1. Anna Conte & M. Levati, 2014. "Use of data on planned contributions and stated beliefs in the measurement of social preferences," Theory and Decision, Springer, vol. 76(2), pages 201-223, February.
  2. Klor, Esteban F. & Kube, Sebastian & Winter, Eyal & Zultan, Ro’i, 2014. "Can higher rewards lead to less effort? Incentive reversal in teams," Journal of Economic Behavior & Organization, Elsevier, vol. 97(C), pages 72-83.
  3. Ondrej Rydval, & Andreas Ortmann & Michal Ostatnicky, 2008. "Three Very Simple Games and What It Takes to Solve Them," CERGE-EI Working Papers wp347, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
  4. Klor, Esteban F. & Kube, Sebastian & Winter, Eyal & Zultan, Ro'i, 2011. "Can Higher Bonuses Lead to Less Effort? Incentive Reversal in Teams," IZA Discussion Papers 5501, Institute for the Study of Labor (IZA).
  5. Vincent Anesi & Philippe De Donder, 2011. "Secondary issues and party politics: an application to environmental policy," Social Choice and Welfare, Springer, vol. 36(3), pages 519-546, April.

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