Abstract
We consider a dynamic decision making framework for an agent with changing tastes, and provide an analysis of consistent planning as a viable solution. Using the agent's preferences today over decision problems tomorrow, we uniquely identify her expected future rankings, and her expectations on how these rankings will be used in choice making tomorrow. The identification result allows for a comparison of consistency between today's expectations and tomorrow's rankings yielding a comparative measure of sophistication and naivety of the agents. Moreover, the identification result permits for a comparison of the agents' optimism on possible tie breaking rules. We axiomatically characterize the two extreme cases; we show that a Strotzian consistent planner is the most optimistic, while -- what we call -- a cautiously consistent planner is the most pessimistic.
| Original language | English |
|---|---|
| Number of pages | 27 |
| Publication status | Unpublished - 2015 |
Keywords
- changing tastes
- consistent planning
- dynamic consistency
- Strotz preferences