Strategic ignorance as a self-disciplining device
Item Type
Language
English
Abstract
We analyse the decision of an agent with time-inconsistent preferences to consume a good that exerts an externality on future welfare. The extent of the externality is initially unknown, but may be learned via a costless sampling procedure. We show that when the agent cannot commit to future consumption and learning decisions, incomplete learning may occur on a Markov perfect equilibrium path of the resulting intra-personal game. In such a case, each agent's incarnation stops learning for some values of the posterior distribution of beliefs and acts under self-restricted information. This conduct is interpreted as strategic ignorance. All equilibria featuring this property strictly Pareto dominate the complete learning equilibrium for any posterior distribution of beliefs.
Publication Title
Publication Year
2000
Publication Date
2000
License
ISSN
1467-937X
Physical Description
vol. 67, n. 3, pp. 529-544