IDEAS home Printed from
MyIDEAS: Login to save this paper or follow this series

Imperfect Information Processing in Sequential Bargaining Games with Present Biased Preferences

  • Zafer Akin

This paper studies an alternating-offers bargaining game between a time-consistent player and a time-inconsistent player who processes information on future self-preferences imperfectly. Time-inconsistency and information processing are modeled by using cognitive and mood state approaches, respectively. This model structure allows for the learning of the partially naive time-inconsistent agent. The results characterize the relationship among the level of naivete, the level of learning probability and the equilibrium. We find critical values of the model parameters that specify whether the agreement is delayed and characterize the probabilistic nature of the agreement. In addition, comparative static results are reported with respect to time preferences.

(This abstract was borrowed from another version of this item.)

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Our checks indicate that this address may not be valid because: 500 Can't connect to If this is indeed the case, please notify (Ismail Saglam)

File Function: First version
Download Restriction: no

Paper provided by TOBB University of Economics and Technology, Department of Economics in its series Working Papers with number 0810.

in new window

Date of creation: Aug 2008
Date of revision:
Handle: RePEc:tob:wpaper:0810
Contact details of provider: Phone: (+90 312) 292-4000
Fax: (+90 312) 287-1946
Web page:

More information through EDIRC

References listed on IDEAS
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.:

as in new window
  1. Drew Fudenberg & David K. Levine, 2004. "A Dual Self Model of Impulse Control," Harvard Institute of Economic Research Working Papers 2049, Harvard - Institute of Economic Research.
  2. Ariel Rubinstein, 2010. "Perfect Equilibrium in a Bargaining Model," Levine's Working Paper Archive 661465000000000387, David K. Levine.
  3. Matthew Rabin & Ted O'Donoghue, 1999. "Doing It Now or Later," American Economic Review, American Economic Association, vol. 89(1), pages 103-124, March.
  4. Kfir Eliaz & Ran Spiegler, 2004. "Contracting with Diversely Naïve Agents," Levine's Bibliography 122247000000000530, UCLA Department of Economics.
  5. Laibson, David I., 1997. "Golden Eggs and Hyperbolic Discounting," Scholarly Articles 4481499, Harvard University Department of Economics.
  6. Raghunathan, Rajagopal & Pham, Michel Tuan, 1999. "All Negative Moods Are Not Equal: Motivational Influences of Anxiety and Sadness on Decision Making, , , , ," Organizational Behavior and Human Decision Processes, Elsevier, vol. 79(1), pages 56-77, July.
  7. Paul Heidhues & Botond Kőszegi, 2009. "Futile Attempts at Self-Control," Journal of the European Economic Association, MIT Press, vol. 7(2-3), pages 423-434, 04-05.
  8. Linda Babcock & George Loewenstein, 1997. "Explaining Bargaining Impasse: The Role of Self-Serving Biases," Journal of Economic Perspectives, American Economic Association, vol. 11(1), pages 109-126, Winter.
  9. O'Donoghue, Ted & Rabin, Matthew, 2000. "Choice and Procrastination," Department of Economics, Working Paper Series qt5r26k54p, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  10. Stefano DellaVigna & Ulrike Malmendier, 2006. "Paying Not to Go to the Gym," American Economic Review, American Economic Association, vol. 96(3), pages 694-719, June.
  11. Rubinstein, Ariel, 1985. "A Bargaining Model with Incomplete Information about Time Preferences," Econometrica, Econometric Society, vol. 53(5), pages 1151-72, September.
  12. Zafer Akin, 2005. "Time Inconsistency And Learning In Bargaining Games," Game Theory and Information 0507003, EconWPA.
  13. Asheim, Geir B., 2007. "Procrastination, partial naivete, and behavioral welfare analysis," Memorandum 02/2007, Oslo University, Department of Economics.
  14. Barton L. Lipman, 1995. "Information Processing and Bounded Rationality: A Survey," Canadian Journal of Economics, Canadian Economics Association, vol. 28(1), pages 42-67, February.
  15. Malmendier, Ulrike M. & Della Vigna, Stefano, 2003. "Contract Design and Self Control: Theory and Evidence," Research Papers 1801, Stanford University, Graduate School of Business.
  16. Loewenstein, George & O'Donoghue, Ted & Rabin, Matthew, 2002. "Projection Bias in Predicting Future Utility," Working Papers 02-11, Cornell University, Center for Analytic Economics.
  17. Paul Heidhues & Botond Koszegi, 2010. "Exploiting Naivete about Self-Control in the Credit Market," American Economic Review, American Economic Association, vol. 100(5), pages 2279-2303, December.
  18. Gregory Besharov, 2004. "Second-Best Considerations in Correcting Cognitive Biases," Southern Economic Journal, Southern Economic Association, vol. 71(1), pages 12-20, July.
  19. Shane Frederick & George Loewenstein & Ted O'Donoghue, 2002. "Time Discounting and Time Preference: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 351-401, June.
  20. Gilpatric, Scott M., 2008. "Present-biased preferences, self-awareness and shirking," Journal of Economic Behavior & Organization, Elsevier, vol. 67(3-4), pages 735-754, September.
  21. Babcock, Linda, et al, 1995. "Biased Judgments of Fairness in Bargaining," American Economic Review, American Economic Association, vol. 85(5), pages 1337-43, December.
  22. Lu�s Santos-Pinto & Joel Sobel, 2005. "A Model of Positive Self-Image in Subjective Assessments," American Economic Review, American Economic Association, vol. 95(5), pages 1386-1402, December.
  23. B. Douglas Bernheim & Antonio Rangel, 2004. "Addiction and Cue-Triggered Decision Processes," American Economic Review, American Economic Association, vol. 94(5), pages 1558-1590, December.
  24. Daniel Kahneman, 2003. "Maps of Bounded Rationality: Psychology for Behavioral Economics," American Economic Review, American Economic Association, vol. 93(5), pages 1449-1475, December.
  25. Chade, Hector & Prokopovych, Pavlo & Smith, Lones, 2008. "Repeated games with present-biased preferences," Journal of Economic Theory, Elsevier, vol. 139(1), pages 157-175, March.
  26. Besharov, Gregory, 2001. "Second-Best Considerations in Correcting Cognitive Biases," Working Papers 01-08, Duke University, Department of Economics.
  27. Andrew Postlewaite & Olivier Compte, 2008. "Repeated Relationships with Limits on Information Processing," PIER Working Paper Archive 08-026, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
  28. Loewenstein, George, 1996. "Out of Control: Visceral Influences on Behavior," Organizational Behavior and Human Decision Processes, Elsevier, vol. 65(3), pages 272-292, March.
  29. repec:tpr:qjecon:v:114:y:1999:i:1:p:37-82 is not listed on IDEAS
  30. repec:tpr:qjecon:v:117:y:2002:i:3:p:871-915 is not listed on IDEAS
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:tob:wpaper:0810. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ismail Saglam)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.