Naiveté and sophistication in dynamic inconsistency

Zsombor Meder, Janos Flesch, Ronald Peeters

Research output: Contribution to journalArticleAcademicpeer-review

Abstract

This paper introduces a general framework for dealing with dynamic inconsistency in the context of Markov decision problems. It decouples and examines concepts that are often entwined in the literature. It distinguishes between the decision maker and her various temporal selves, and between the beliefs and intentions of the selves. The creation of a unified formalism to deal with dynamic inconsistency allows for the introduction of a hybrid decision maker, who is naive sometimes, sophisticated at others. Such a hybrid decision maker can be used to model situations where type determination is endogenous. Interestingly, the analysis of hybrid types indicates that self-deception can be optimal. (C) 2017 Elsevier B.V. All rights reserved.

Original languageEnglish
Pages (from-to)40-54
Number of pages15
JournalMathematical Social Sciences
Volume87
DOIs
Publication statusPublished - May 2017

Keywords

  • SELF-CONTROL
  • DECISION-MAKING
  • MODEL
  • PREFERENCES
  • ADDICTION
  • HORIZON
  • UTILITY
  • CHOICE
  • TASTES

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