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Thinking ahead: the decision problem

Bolton, Patrick and Faure-Grimaud, Antoine (2009) Thinking ahead: the decision problem. Review of Economic Studies, 76 (4). pp. 1205-1238. ISSN 0034-6527

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Abstract

We propose a model of costly decision making based on time-costs of deliberating current and future decisions. We model an individual decision-maker's thinking process as a thought-experiment that takes time, and lets the decision maker ‘think ahead’ about future decision problems in yet unrealized states of nature. By formulating an intertemporal, state-contingent, planning problem which may involve costly deliberation in every state of nature, and by letting the decision maker deliberate ahead of the realization of a state, we attempt to capture the basic observation that individuals generally do not think through a complete action plan. Instead, individuals prioritize their thinking and leave deliberations on less important decisions to the time or event when they arise.

Item Type: Article
Official URL: http://restud.oxfordjournals.org/
Additional Information: © 2009 OUP
Library of Congress subject classification: B Philosophy. Psychology. Religion > B Philosophy (General)
H Social Sciences > HB Economic Theory
Sets: Departments > Economics
Collections > Economists Online
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Date Deposited: 05 Apr 2011 09:45
URL: http://eprints.lse.ac.uk/30452/

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