Todd Sarver

A Unique Costly Contemplation Representation

We study preferences over menus which can be represented as if the individual is uncertain of her tastes, but is able to engage in costly contemplation before selecting an alternative from a menu. Since contemplation is costly, our key axiom, aversion to contingent planning, reflects the individuals preference to learn the menu from which she will be choosing prior to engaging in contemplation about her tastes for the alternatives. Our representation models contemplation strategies as subjective signals over a subjective state space. The subjectivity of the state space and the information structure in our representation makes it difficult to identify them from the preference. To overcome this issue, we show that each signal can be modeled in reduced form as a measure over ex post utility functions without reference to a state space. We show that in this reduced-form representation, the set of measures and their costs are uniquely identified. Finally, we provide a measure of comparative contemplation costs and characterize the special case of our representation where contemplation is costless. Copyright 2010 The Econometric Society.

Preference for Flexibility and Random Choice

We study a two-stage model where the agent has preferences over menus as in Dekel, Lipman, and Rustichini (2001) in the first period and then makes random choices from menus as in Gul and Pesendorfer (2006) in the second period. Both preference for flexibility in the first period and strictly random choices in the second period can be, respectively, rationalized by subjective state spaces. Our main result characterizes the representation where the two state spaces align, so the agent correctly anticipates her future choices. The joint representation uniquely identifies probabilities over subjective states and magnitudes of utilities across states. We also characterize when the agent completely overlooks some subjective states that realize at the point of choice.

Hidden Actions and Preferences for Timing of Resolution of Uncertainty

We study preferences for timing of resolution of objective uncertainty in a menu-choice model with two stages of information arrival. We characterize a general class of utility representations called hidden action representations, which interpret an intrinsic preference for timing of resolution of uncertainty as if an unobservable action is taken between the resolution of the two periods of information arrival. These representations permit a richer class of preferences for timing than was possible in the model of Kreps and Porteus (1978) by incorporating a preference for flexibility. Our model contains several special cases where this hidden action can be given a novel economic interpretation, including a subjective-state-space model of ambiguity aversion and a model of costly contemplation.

Correlated equilibrium in evolutionary models with subpopulations

Abstract We study a version of the multipopulation replicator dynamics, where each population is comprised of multiple subpopulations. We establish that correlated equilibrium is a natural solution concept in this setting. Specifically, we show that every correlated equilibrium is equivalent to a stationary state in the replicator dynamics of some subpopulation model. We also show that every interior stationary state, Lyapunov stable state, or limit of an interior solution is equivalent to a correlated equilibrium. We provide an example with a Lyapunov stable limit state whose equivalent correlated equilibrium lies outside the convex hull of the set of Nash equilibria. Finally, we prove that if the matching distribution is a product measure, a state satisfying any of the three conditions listed above is equivalent to a Nash equilibrium.

Naiveté About Temptation and Self-Control: Foundations for Naive Quasi-Hyperbolic Discounting

We introduce and characterize a recursive model of dynamic choice that accommodates naiveté about present bias. The model incorporates costly self-control in the sense of Gul and Pesendorfer (2001) to overcome the technical hurdles of the Strotz representation. The important novel condition is an axiom for naiveté. We first introduce appropriate definitions of absolute and comparative naiveté for a simple two-period model, and explore their implications for the costly self-control model. We then extend this definition for infinite-horizon environments, and discuss some of the subtleties involved with the extension. Incorporating the definition of absolute naiveté as an axiom, we characterize a recursive representation of naive quasi-hyperbolic discounting with self-control for an individual who is jointly overoptimistic about her present-bias factor and her ability to resist instant gratification. We study the implications of our proposed comparison of naiveté for the parameters of the recursive representation. Finally, we discuss the obstacles that preclude more general notions of naiveté, and illuminate the impossibility of a definition that simultaneously incorporates both random choice and costly self-control.