Doing it now, later, or never
P. Jean-Jacques Herings and
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K. Cingiz: Microeconomics & Public Economics
J. Flesch: Quantitative Economics
No 22, Research Memorandum from Maastricht University, Graduate School of Business and Economics (GSBE)
We study centipede games played by an infinite sequence of players. Following the literature on time-inconsistent preferences, we distinguish two types of decision makers, naive and sophisticated, and the corresponding solution concepts, naïve ϵ-equilibrium and sophisticated ϵ-equilibrium. We show the existence of both naive and sophisticated ϵ-equilibria for each positive ϵ. Under the assumption that the payoff functions are upper semicontinuous, we furthermore show that there exist both naive and sophisticated 0-equilibria in pure strategies. We also compare the probability to stop of a naive versus a sophisticated decision maker and show that a sophisticated decision maker stops earlier.
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Journal Article: Doing it now, later, or never (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:unm:umagsb:2015022
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