Myopic, Naive, Resolute or Sophisticated? A study of how people take dynamic decisions

Hey, John D. and Panaccione, Luca (2009) Myopic, Naive, Resolute or Sophisticated? A study of how people take dynamic decisions. [Discussion Paper]. p. 29. (Submitted)

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Potentially dynamically-inconsistent individuals create particular problems for economics, as their behaviour depends upon whether and how they attempt to resolve their potential inconsistency. This paper reports on the results of a new experiment designed to help us distinguish between the different types that may exist. We classify people into four types: myopic, naive, resolute and sophisticated. We implement a new and simple experimental design in which subjects are asked to take two sequential decisions (interspersed by a random move by Nature) concerning the allocation of a given sum of money. The resulting data enables us to classify the subjects. We find that the majority are resolute, a significant minority are sophisticated and rather few are naive or myopic.

Item Type:Report / Paper (Discussion Paper)
Research documents and activity classification:Working Papers > Non-Refereed Working Papers / of national relevance only
Divisions:Department of Business and Management
Uncontrolled Keywords:Dynamic inconsistency. Sequential choice. Myopic. Naive. Resolute. Sophisticated.
MIUR Scientific Area:Area 13 - Economics and Statistics > SECS-P/01 Political Economy
Deposited By:Barbara Scipioni
Deposited On:28 Oct 2009 12:08
Last Modified:28 May 2013 23:07

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