Myopic, Naive, Resolute or Sophisticated? A study of how people take dynamic decisions
AbstractPotentially dynamically-inconsistent individuals create particular problems for economics, as their behaviour depends upon whether and how they attempt to resolve their potential inconsistency. This paper reports on the results of a new experiment designed to help us distinguish between the different types that may exist. We classify people into four types: myopic, naive, resolute and sophisticated. We implement a new and simple experimental design in which subjects are asked to take two sequential decisions (interspersed by a random move by Nature) concerning the allocation of a given sum of money. The resulting data enables us to classify the subjects. We find that the majority are resolute, a significant minority are sophisticated and rather few are naive or myopic.
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Bibliographic InfoPaper provided by Department of Economics, University of York in its series Discussion Papers with number 09/17.
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Postal: Department of Economics and Related Studies, University of York, York, YO10 5DD, United Kingdom
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dynamic inconsistency; sequential choice; myopic; naive; resolute; sophisticated;
Find related papers by JEL classification:
- D90 - Microeconomics - - Intertemporal Choice - - - General
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-08-08 (All new papers)
- NEP-CBE-2009-08-08 (Cognitive & Behavioural Economics)
- NEP-EXP-2009-08-08 (Experimental Economics)
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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