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Cooperating with yourself

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  • Borissov, Kirill
  • Pakhnin, Mikhail
  • Wendner, Ronald

Abstract

We address time-inconsistent decision making by studying two types of intrapersonal cooperation in the Ramsey model with quasi-hyperbolic discounting. First, we consider temporal selves following the Golden Rule principle (do unto others as you would have them do unto you). Second, we consider temporal selves following Kant's categorical imperative (act as you would want all others to act towards all others). We introduce the corresponding cooperative policies and characterize them for economies with respectively log-utility and Cobb–Douglas technology, and isoelastic utility and linear technology. We compare cooperative behavior with non-cooperative (naive and sophisticated) behavior in terms of saving rates, and show that intrapersonal cooperation improves welfare according to all commonly used welfare criteria.

Suggested Citation

  • Borissov, Kirill & Pakhnin, Mikhail & Wendner, Ronald, 2024. "Cooperating with yourself," Games and Economic Behavior, Elsevier, vol. 148(C), pages 398-414.
    • Handle: RePEc:eee:gamebe:v:148:y:2024:i:c:p:398-414
    DOI: 10.1016/j.geb.2024.10.003
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    More about this item

    Keywords

    Quasi-hyperbolic discounting; Time inconsistency; Cooperation; Kantian equilibrium; Berge equilibrium; Welfare;
    All these keywords.

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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