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

John D. Hey, Gianna Lotito
2018 Experiments in Economics  
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
more » ... guish these three possibilities. We find that the majority of subjects are either naive or resolute (with slightly more being naive) but very few are sophisticated. These results have important implications for predicting the behaviour of people in dynamic situations.
doi:10.1142/9789813235816_0011 fatcat:cbrqlllqingkdeexpsroa43y4i