Boundedly rational backward induction

• 成果类型: Article
• 署名作者: Ke, Shaowei
• 署名单位: University of Michigan System; University of Michigan
• 刊物名称: THEORETICAL ECONOMICS
• ISSN/ISSBN: 1933-6837
• DOI: 10.3982/TE2402
• 发表日期: 2019-01-01
• 页码: 103-134
• 关键词: Dynamic choice; imperfect foresight; time inconsistency; D00

摘要

This paper proposes simple axioms that characterize a generalization of backward induction. At any node of a decision tree, the decision maker looks forward a fixed number of stages perfectly. Beyond that, the decision maker aggregates continuation values according to a function that captures reasoning under unpredictability. The model is uniquely identified from the decision maker's preference over decision trees. Confronting a decision tree, the decision maker iteratively revises her plan for the future as she moves forward in the decision tree. A comparative measure of unpredictability aversion and several examples are discussed.