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Behavioral Characterizations of Naivet� for Time-Inconsistent Preferences

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We propose nonparametric de"nitions of absolute and comparative naivete. These de"nitions leverage ex-ante choice of menu to identify predictions of future behavior and ex-post (random) choices from menus to identify actual behavior. The main advantage of our de"nitions is their independence from any assumed functional form for the utility function representing behavior. An individual is sophisticated if she is indi"erent ex-ante between retaining the option to choose from a menu ex-post or committing to her actual distribution of choices from that menu. She is naive if she prefers the flexibility in the menu, reflecting a mistaken belief that she will act more virtuously than she actually will. We propose two de"nitions of comparative naivete and explore the restrictions implied by our de"nitions for several prominent models of time inconsistency.

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  • David S. Ahn & Ryota Iijima & Yves Le Yaouanq & Todd Sarver, 2017. "Behavioral Characterizations of Naivet� for Time-Inconsistent Preferences," Cowles Foundation Discussion Papers 2074R, Cowles Foundation for Research in Economics, Yale University, revised Nov 2018.
  • Handle: RePEc:cwl:cwldpp:2074r
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    Cited by:

    1. Mihm, Maximilian & Ozbek, Kemal, 2019. "On the identification of changing tastes," Games and Economic Behavior, Elsevier, vol. 116(C), pages 203-216.
    2. Igor Kopylov & Jawwad Noor, 2018. "Commitments and weak resolve," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 66(1), pages 1-19, July.
    3. David S. Ahn & Ryota Iijima & Todd Sarver, 2017. "Naivet� About Temptation and Self-Control: Foundations for Naive Quasi-Hyperbolic Discounting," Cowles Foundation Discussion Papers 2099, Cowles Foundation for Research in Economics, Yale University.
    4. Toussaert, Séverine, 2018. "Eliciting temptation and self-control through menu choices: a lab experiment," LSE Research Online Documents on Economics 88107, London School of Economics and Political Science, LSE Library.
    5. Anett John, 2020. "When Commitment Fails: Evidence from a Field Experiment," Management Science, INFORMS, vol. 66(2), pages 503-529, February.
    6. Mihm, Maximilian & Ozbek, Kemal, 2018. "Mood-driven choices and self-regulation," Journal of Economic Theory, Elsevier, vol. 176(C), pages 727-760.

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    Keywords

    Naive; Sophisticated; Time inconsistent; Comparative statics;
    All these keywords.

    JEL classification:

    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General

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