Do People (Want to) Plan?

Central to many theoretical accounts of the process by which (rational) people tackle dynamic decision problems is the concept of a plan: a set of conditional decisions as to what would be decided under certain conditions (imposed by Nature). The notion of a plan is clearly central to theories of dynamic decision making in which backward induction and the Principle of Optimality are invoked. To many theorists, the adoption and subsequent implementation of a plan are almost axioms of rational behaviour. These theorists ask two questions: how can dynamic decisions be taken in the absence of a plan; why would anyone want to change the plan once it is embarked upon. Experimental economists have begun to explore the implications of these notions. For example, work by Robin Cubitt and his associates has investigated whether the way a dynamic decision problem is formulated and presented to the subjects has any effect on the decisions taken by the subjects; if the subjects have a plan, and implement it in the sense discussed above, there should be no effect. Cubitt and his associates find some effect. With Massimo Paradiso I have investigated whether subjects have preferences over different formulations and presentations, for example, whether subjects prefer to be forced to pre-commit themselves (to a plan) or whether they prefer the flexibility of not being pre-committed. Of course, if subjects have a plan in the sense discussed above they should be indifferent between all such alternative formulations (of the same choice problem). However, we find they are not. Of course, subjects could behave the same yet have differing preferences; they could, conceivably also have identical preferences but behave differently, but neither of these types of experiments casts direct light on the key question as to whether subjects have plans and implement them. This is the purpose of the new experiments reported in this paper. These experiments were difficult to design because of the difficulty of observing correctly whether a plan exists in the subject’s mind, and particularly because of the difficulty of getting the subject to honestly reveal the existence and nature of a plan. The problem is simple: if the subject is not going to be forced to follow the announced plan, what incentive is there for reporting it honestly? And if the subject is forced to follow the announced plan, then the dynamic choice problem has been transformed into a static (pre-commitment) choice problem - and the very thing that we want to examine has been transformed away. We have an experimental design which overcomes these problems. The paper reports on the results of an experiment carried out by ESSE (Economia Sperimentale al Sud d’Europa) in Bari.

Advances in Synthetic Gauge Fields for Light Through Dynamic Modulation

Photons are weak particles that do not directly couple to magnetic fields. However, it is possible to generate a photonic gauge field by breaking reciprocity such that the phase of light depends on its direction of propagation. This non-reciprocal phase indicates the presence of an effective magnetic field for the light itself. By suitable tailoring of this phase it is possible to demonstrate quantum effects typically associated with electrons, and as has been recently shown, non-trivial topological properties of light. This paper reviews dynamic modulation as a process for breaking the time-reversal symmetry of light and generating a synthetic gauge field, and discusses its role in topological photonics, as well as recent developments in exploring topological photonics in higher dimensions.Comment: 20 pages, 3 figure

How Far Ahead Do People Plan?

We report on a simple experiment which enables us to infer how far people plan ahead when taking decisions in a dynamic risky context. Usually economic theory assumes that people plan right to the end of the planning horizon. We find that this is true for a little over half of the subjects in the experiment, while a little under one half seem not to plan ahead at all.Planning, dominance, myopia, naivety, sophistication

Two Experiments to Test a Model of Herd Behaviour

We carry out two experiments to test a model of herd behaviour based on the work of Banerjee (1992). He shows that herding occurs as a result of people observing the actions of others and using this information in their own decision rule. However, in our experiments herding does not occur as frequently as Banerjee predicts. Contrary to his results, the subjects' behaviour appears to depend on the probabilities of receiving a signal and of this signal being correct. Furthermore, he finds that the pattern of decision making over a number of rounds of the game is volatile whereas we find that decision making is volatile within rounds.

Myopic, Naive, Resolute or Sophisticated? A study of how people take dynamic decisions

Potentially dynamically-inconsistent individuals create particular problems for economics, as their behaviour depends upon whether and how they attempt to resolve their potential inconsistency. This paper reports on the results of a new experiment designed to help us distinguish between the different types that may exist. We classify people into four types: myopic, naive, resolute and sophisticated. We implement a new and simple experimental design in which subjects are asked to take two sequential decisions (interspersed by a random move by Nature) concerning the allocation of a given sum of money. The resulting data enables us to classify the subjects. We find that the majority are resolute, a significant minority are sophisticated and rather few are naive or myopic.dynamic inconsistency, sequential choice, myopic, naive, resolute, sophisticated

Dynamic Choice and Timing-Independence: an experimental investigation

Timing-independence implies that individuals are indifferent between a sequential choice problem and a planned choice problem which are strategically equivalent except for the timing of resolution of the uncertainty. This paper reports an experiment in which we investigate whether the timing of resolution of the uncertainty affects individual preferences. We elicit individual preferences for three strategically equivalent decisions problems. The experimental results suggest that timing- independence is an inappropriate assumption of individual preferences. The paper discusses possible implications of such findings.

Are Revealed Intentions Possible?

This paper asks whether it is possible to design an Intentions Revealing Experiment – that is, an experiment in which the early moves of the decision maker in a dynamic decision problem reveal the intentions of that decision maker regarding later moves in the decision problem. If such a type of experiment is possible, then it will enable economists to test whether individuals have plans and implement them – a basic assumption of all economic theories of dynamic decision making. Unfortunately the main finding of the paper is in the form of two Impossibility Theorems which show that, unless one is prepared to make certain assumptions, such an Intentions Revealing Experiment is impossible. However, the paper does have a positive side – it describes the type of assumptions that one needs to make in order to make an Intentions Revealing Experiment possible.crisis, Romania, strategy, inversion