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Do People Plan?

Author

Listed:
  • John Bone
  • John D Hey
  • John Suckling

Abstract

We report the results of an experimental investigation of a key axiom of economic theories of dynamic decision making – namely, that agents plan. Inferences from previous investigations have been confounded with issues concerning the preference functionals of the agents. Here, we present an innovative experimental design which is driven purely by dominance: if preferences satisfy dominance, we can infer whether subjects are planning ahead. We implement two sets of experiments: the first (the Individual Treatment) in which the same player takes decisions both in the present and the future; and the second the Pairs Treatment) in which different players take decisions at different times. In both contexts, according to economic theory, the players in the present should anticipate the decision of the player in the future. We find that over half the participants in both experimental treatments do not appear to be planning ahead; moreover, their ability to plan ahead does not improve with experience. These findings identify an important lacuna in economic theories, both for individual behaviour and for behaviour in games.

Suggested Citation

  • John Bone & John D Hey & John Suckling, 2006. "Do People Plan?," Discussion Papers 06/22, Department of Economics, University of York, revised Jul 2007.
    • Handle: RePEc:yor:yorken:06/22
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    References listed on IDEAS

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    1. Dewatripont,Mathias & Hansen,Lars Peter & Turnovsky,Stephen J. (ed.), 2003. "Advances in Economics and Econometrics," Cambridge Books, Cambridge University Press, number 9780521818728, November.
    2. Dewatripont,Mathias & Hansen,Lars Peter & Turnovsky,Stephen J. (ed.), 2003. "Advances in Economics and Econometrics," Cambridge Books, Cambridge University Press, number 9780521524131, November.
    3. John D. Hey, 2002. "Experimental Economics and the Theory of Decision Making Under Risk and Uncertainty," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 27(1), pages 5-21, June.
    4. Dewatripont,Mathias & Hansen,Lars Peter & Turnovsky,Stephen J. (ed.), 2003. "Advances in Economics and Econometrics," Cambridge Books, Cambridge University Press, number 9780521818742, November.
    5. Dewatripont,Mathias & Hansen,Lars Peter & Turnovsky,Stephen J. (ed.), 2003. "Advances in Economics and Econometrics," Cambridge Books, Cambridge University Press, number 9780521524117, November.
    6. John D. Bone & John D. Hey & John R. Suckling, 2003. "Do people plan ahead?," Applied Economics Letters, Taylor & Francis Journals, vol. 10(5), pages 277-280, April.
    7. T. Randolph Beard & Richard O. Beil, 1994. "Do People Rely on the Self-Interested Maximization of Others? An Experimental Test," Management Science, INFORMS, vol. 40(2), pages 252-262, February.
    8. Dewatripont,Mathias & Hansen,Lars Peter & Turnovsky,Stephen J. (ed.), 2003. "Advances in Economics and Econometrics," Cambridge Books, Cambridge University Press, number 9780521818735, November.
    9. Dewatripont,Mathias & Hansen,Lars Peter & Turnovsky,Stephen J. (ed.), 2003. "Advances in Economics and Econometrics," Cambridge Books, Cambridge University Press, number 9780521524124, November.
    10. Cubitt, Robin P & Starmer, Chris & Sugden, Robert, 1998. "Dynamic Choice and the Common Ratio Effect: An Experimental Investigation," Economic Journal, Royal Economic Society, vol. 108(450), pages 1362-1380, September.
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Many people do not plan ahead
      by Economic Logician in Economic Logic on 2009-11-06 21:59:00

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    More about this item

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General

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