Doing it now, later, or never

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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.
Original languageEnglish
Place of PublicationMaastricht
PublisherMaastricht University, Graduate School of Business and Economics
Number of pages20
Publication statusPublished - 1 Jan 2015

Publication series

SeriesGSBE Research Memoranda

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