Journal Article

Strategic Ignorance as a Self-Disciplining Device

Juan D. Carrillo and Thomas Mariotti

in The Review of Economic Studies

Published on behalf of Review of Economic Studies Ltd

Volume 67, issue 3, pages 529-544
Published in print July 2000 | ISSN: 0034-6527
Published online July 2000 | e-ISSN: 1467-937X | DOI: http://dx.doi.org/10.1111/1467-937X.00142
Strategic Ignorance as a Self-Disciplining Device

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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.

Journal Article.  0 words. 

Subjects: Economics

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