Naive, resolute or sophisticated? A study of dynamic decision making

Hey, John D. and Lotito, Gianna (2007) Naive, resolute or sophisticated? A study of dynamic decision making. [Discussion Paper]. p. 62. Discussion Papers in Economics (No. 07/03).

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Official URL: http://www.york.ac.uk/media/economics/documents/di...

Abstract/Index

Dynamically inconsistent decision makers have to decide, implicitly or explicitly, what to do about their dynamic inconsistency. Economic theorists have identified three possible responses – to act naively (thus ignoring the dynamic inconsistency), to act resolutely (not letting their inconsistency affect their behaviour) or to act sophisticatedly (hence taking into account their inconsistency). We use data from a unique experiment (which observes both decisions and evaluations) in order to distinguish these three possibilities. We find that the majority of subjects are either naïve or resolute (with slightly more being naïve) but very few are sophisticated. These results have important implications for predicting the behaviour of people in dynamic situations.


Item Type:Report / Paper (Discussion Paper)
Research documents and activity classification:Working Papers > Refereed Working Papers / of international relevance
Divisions:Department of Business and Management
Additional Information:The paper is the preliminary version of: John Hey & Gianna Lotito, 2009. "Naive, resolute or sophisticated? A study of dynamic decision making," Journal of Risk and Uncertainty, Springer, vol. 38(1), pages 1-25, February.
Uncontrolled Keywords:Dynamic decision making; naivety; sophistication; resoluteness; dynamic inconsistencies.
MIUR Scientific Area:Area 13 - Economics and Statistics > SECS-P/01 Political Economy
Deposited By:Maria Teresa Nistico
Deposited On:06 Dec 2010 15:37
Last Modified:19 Apr 2013 23:29

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