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Doing it now, later, or never

K. Cingiz, J. Flesch, P. Jean-Jacques Herings and Arkadi Predtetchinski
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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)

Abstract: 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.

Date: 2015-01-01
New Economics Papers: this item is included in nep-gth, nep-hpe and nep-mic
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DOI: 10.26481/umagsb.2015022

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