I'm Not Sure What to Think About Them: Non-Bayesian Updating for Naive Present-Biased Players

22 Pages Posted: 22 Oct 2019

See all articles by Joshua S. Gans

Joshua S. Gans

University of Toronto - Rotman School of Management; NBER

Peter Landry

University of Toronto - Rotman School of Management

Date Written: October 12, 2019

Abstract

Using a stylized model of group production, we investigate challenges that arise when introducing naive present bias into multi-player games. In particular, we tackle the question of how, when discovering their own present bias, a naive player — who perceives this discovery as a zero-probability event — updates their beliefs regarding their partner's present bias as well as higher-order beliefs regarding both players' present biases. Our analysis demonstrates how equilibrium behavior and outcomes can be highly dependent on the "direction'' with which naive players reassess their prior beliefs. In some situations, a naive player may actually become more inclined to exert effort in pursuit a future reward upon discovering their own present bias. The analysis also shows how naive players can, under the right circumstances, overcome coordination issues that would not be overcome by sophisticated players. More broadly, our approach offers a potential path forward for modeling interactions among naive players.

Keywords: hyperbolic discounting, present bias, teams, motivation, procrastination, higher-order beliefs, non-Bayesian updating, null events

JEL Classification: C72

Suggested Citation

Gans, Joshua S. and Landry, Peter, I'm Not Sure What to Think About Them: Non-Bayesian Updating for Naive Present-Biased Players (October 12, 2019). Available at SSRN: https://ssrn.com/abstract=3468771 or http://dx.doi.org/10.2139/ssrn.3468771

Joshua S. Gans (Contact Author)

University of Toronto - Rotman School of Management ( email )

Canada

HOME PAGE: http://www.joshuagans.com

NBER ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Peter Landry

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

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