Imperfect Recall and Time Inconsistencies: An experimental test of the absentminded driver "paradox"

Maria Levati, Matthias Uhl and Ro'i Zultan
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Matthias Uhl: Max Planck Institute of Economics, Strategic Interaction Group, Jena, Germany

No 2010-035, Jena Economics Research Papers from Friedrich-Schiller-University Jena

Abstract: Absentmindedness is a special case of imperfect recall which according to Piccione and Rubinstein (1997a) leads to time inconsistencies. Aumann, Hart and Perry (1997a) question their argument and show how dynamic inconsistencies can be resolved. The present paper explores this issue from a descriptive point of view by examining the behavior of absentminded individuals in a laboratory environment. Absentmindedness is manipulated in two ways. In one treatment, it is induced by cognitively overloading participants. In the other, it is imposed by randomly matching decisions with decision nodes in the information set. The results provide evidence for time inconsistencies in all treatments. We introduce a behavioral principal, which best explains the data.

Keywords: imperfect recall; absentmindedness; dynamic inconsistency; experiment (search for similar items in EconPapers)
JEL-codes: C72 C91 D03 D81 D83 (search for similar items in EconPapers)
Date: 2010-06-16
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-gth
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Journal Article: Imperfect recall and time inconsistencies: an experimental test of the absentminded driver “paradox” (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:jrp:jrpwrp:2010-035

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