Naïve, Resolute or Sophisticated? A Study of Dynamic Decision Making

John Hey and Gianna Lotito

Discussion Papers from Department of Economics, University of York

Abstract: 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.

Keywords: Dynamic decision making; naivety; sophistication; resoluteness; dynamic inconsistencies (search for similar items in EconPapers)
JEL-codes: C91 D80 D90 (search for similar items in EconPapers)
Date: 2007-02
New Economics Papers: this item is included in nep-cbe and nep-exp
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Chapter: Naive, resolute or sophisticated? A study of dynamic decision making (2018)
Journal Article: Naive, resolute or sophisticated? A study of dynamic decision making (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:yor:yorken:07/03

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