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Cold feet

Author

Listed:
  • Epstein, Larry G.

    () (Boston University)

  • Kopylov, Igor

    () (UC Irvine)

Abstract

Individuals often lose confidence in their prospects as they approach the `moment of truth.' An axiomatic model of such individuals is provided. The model adapts and extends (by relaxing the Independence axiom) Gul and Pesendorfer's model of temptation and self-control to capture an individual who changes her beliefs so as to become more pessimistic as payoff time approaches. In a variation of the model, the individual becomes more optimistic at an ex post stage in order to feel better about her available options.

Suggested Citation

  • Epstein, Larry G. & Kopylov, Igor, 2007. "Cold feet," Theoretical Economics, Econometric Society, vol. 2(3), September.
  • Handle: RePEc:the:publsh:317
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    File URL: http://econtheory.org/ojs/index.php/te/article/viewFile/20070231/1345/63
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    Citations

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    Cited by:

    1. Eisenbach, Thomas M. & Schmalz, Martin C., 2016. "Anxiety in the face of risk," Journal of Financial Economics, Elsevier, vol. 121(2), pages 414-426.
    2. Macera, Rosario, 2014. "Dynamic beliefs," Games and Economic Behavior, Elsevier, vol. 87(C), pages 1-18.
    3. Kopylov, Igor, 2009. "Finite additive utility representations for preferences over menus," Journal of Economic Theory, Elsevier, vol. 144(1), pages 354-374, January.
    4. Barbos, Andrei, 2013. "A reference-dependent representation with subjective tastes," Journal of Mathematical Economics, Elsevier, vol. 49(2), pages 111-123.
    5. Eisenbach, Thomas M. & Schmalz, Martin C., 2015. "Anxiety, overconfidence, and excessive risk-taking," Staff Reports 711, Federal Reserve Bank of New York, revised 01 Dec 2015.
    6. Barton L. Lipman & Wolfgang Pesendorfer, 2010. "Temptation," Boston University - Department of Economics - Working Papers Series WP2010-021, Boston University - Department of Economics.
    7. Noor, Jawwad & Takeoka, Norio, 2015. "Menu-dependent self-control," Journal of Mathematical Economics, Elsevier, vol. 61(C), pages 1-20.

    More about this item

    Keywords

    Pessimism; optimism; cold feet; temptation; self-control; moment of truth; temporal proximity; confidence;

    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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