Are Non-Expected Utility individuals really Dynamically Inconsistent? Experimental Evidence

Antoine Nebout and Marc Willinger

Working Papers from LAMETA, Universtiy of Montpellier

Abstract: We investigate whether non-EU agents satisfy strategic dynamic consistency (SDC), i.e. "consistent planning" according to Strotz (1955). Depending on the dynamic axiom that is violated (dynamic consistency, consequentialism or reduction of compound lottery), we categorise non-EU individuals either as naïve, sophisticated or resolute. We rely on experimental data about individual behaviour to built a two-way categorisation of our subjects: firstly, either as EU or non-EU, and secondly either as SDC or non-SDC. Our main finding is that most non-EU subjects satisfy both SDC and dynamic consistency. This result raises an interesting theoretical puzzle about the dynamically consistent behaviour of non-EU agents.

Pages: 49 pages
Date: 2014-07, Revised 2014-07
New Economics Papers: this item is included in nep-exp and nep-upt
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Citations: View citations in EconPapers (2)

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http://www.lameta.univ-montp1.fr/Documents/DR2014-08.pdf Revised version, 2014 (application/pdf)
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