Review of Economic Studies Vol. 76 No. 4 2009
Thinking Ahead: The Decision Problem
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.
- DOI
- 10.1111/j.1467-937x.2009.00554.x
- Volume
- 76
- Issue
- 4
- Pages
- 1205-1238
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref