Doing it Now, Later, or Never

21 Pages Posted: 18 Jul 2015

See all articles by Kutay Cingiz

Kutay Cingiz

Maastricht University

János Flesch

Maastricht University

P. Jean-Jacques Herings

Tilburg University

Arkadi Predtetchinski

Maastricht University

Date Written: July 7, 2015

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.

Keywords: centipede games; subgame prefect ϵ-equilibria, time–inconsistent preferences, upper semi-continuous functions, sophisticated players, naive players

JEL Classification: C70, D11, D60, D74, D91

Suggested Citation

Cingiz, Kutay and Flesch, János and Herings, P. Jean-Jacques and Predtetchinski, Arkadi, Doing it Now, Later, or Never (July 7, 2015). Available at SSRN: https://ssrn.com/abstract=2631590 or http://dx.doi.org/10.2139/ssrn.2631590

Kutay Cingiz

Maastricht University ( email )

P.O. Box 616
Maastricht, Limburg 6200MD
Netherlands

János Flesch

Maastricht University ( email )

P.O. Box 616
Maastricht, Limburg 6200MD
Netherlands

P. Jean-Jacques Herings (Contact Author)

Tilburg University ( email )

Department of Econometrics and Operations Research
P.O. Box 90153
Tilburg, 5000 LE
Netherlands
+31 13 4668797 (Phone)
5000 LE (Fax)

HOME PAGE: http://https://sites.google.com/view/jean-jacques-herings/home

Arkadi Predtetchinski

Maastricht University ( email )

Tongersestraat 53
Maastricht, 6200 MD
Netherlands
+31 43 388 3906 (Phone)

HOME PAGE: http://www.personeel.unimaas.nl/a.predtetchinski/

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