Papers by Gerardo Infante
Research Papers in Economics, Dec 1, 2012
Previous experimental results (Ballinger et al. (2003) and Carbone and Hey (2004)) have found tha... more Previous experimental results (Ballinger et al. (2003) and Carbone and Hey (2004)) have found that many agents fail to correctly take into account the length of the planning horizon also finding some support (See Carbone (2006)) for descriptive models, such as the Rolling Model. This paper presents an experimental analysis on the effect of a short planning horizon on intertemporal consumption choices. The purpose of the study is to test whether very short horizons are more easily perceived by agents, allowing them to plan optimally. This experiment tests a somewhat implicit assumption of the Rolling Model, or of similar descriptive approaches, namely that people might be able to use the optimal strategy if they are faced with shorter planning horizons. Moreover, this hypothesis is tested in the cases of decision making under certainty, risk and uncertainty, in order to analyze how these environments may affect the perception of the length of the planning horizon. Results suggest that planning periods have a significant effect on deviations from unconditional optimum in all sequences and all treatments. This finding has been interpreted as evidence of participants not using the optimal strategy. When conditional deviations are considered, results are confirmed only in the case of decision making under uncertainty. This second finding has been interpreted as suggesting that uncertainty on income seems to prevent participants from improving their decision making.
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Previous experimental results (Ballinger et al. (2003) and Carbone and Hey (2004)) have found tha... more Previous experimental results (Ballinger et al. (2003) and Carbone and Hey (2004)) have found that many agents fail to correctly take into account the length of the planning horizon also nding some sup
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Theory and Decision, 2019
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Journal of Economic Methodology, 2016
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Theory and Decision, 2014
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SSRN Electronic Journal, 2012
ABSTRACT Over the last ten years the literature in experimental economics has seen a growing inte... more ABSTRACT Over the last ten years the literature in experimental economics has seen a growing interest in groups and how they compare to individuals in different settings. This paper contributes to the literature on this topic by investigating the comparison between groups and individuals with respect to intertemporal consumption problems. Empirical evidence has shown how dynamic optimization problems, representing intertemporal consumption decisions, involve computational difficulties that agents are not always equipped to solve optimally. Several econometric estimations on household and aggregate data seem to show that people do not save enough. Similarly, in many experiments, results suggest that people are very different in how they solve this class of problems and in how they react to changes in the decision environment. We present an experiment comparing group and individual planning under risk and uncertainty. Our study is focussed on investigating how groups perform in intertemporal decision making tasks, in particular observing the significance of group planning compared to individuals when choosing under risk and uncertainty. Results suggest that groups perform better than individuals when planning under risk, while the opposite happens in the case of planning under uncertainty. Interestingly, when comparing the behaviour of our agents in the second lifecycle (denominated ''sequence'') groups seem to lose all their advantage on individuals (in terms of less deviation from optimum). We interpret this as a ''stability effect'' caused by the random matching rule adopted during the groups sessions.
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Theory and Decision, 2019
This paper focuses on the comparison of individual and group decision making, in a stochastic int... more This paper focuses on the comparison of individual and group decision making, in a stochastic inter-temporal problem in two decision environments, namely risk and ambiguity. Using a consumption/saving laboratory experiment, we investigate behaviour in four treatments: (1) individual choice under risk; (2) group choice under risk; (3) individual choice under ambiguity and (4) group choice under ambiguity. Comparing decisions within and between decision environments, we find an anti-symmetric pattern. While individuals are choosing on average closer to the theoretical optimal predictions, compared to groups in the risk treatments, groups tend to deviate less under ambiguity. Within decision environments, individuals deviate more when they choose under ambiguity, while groups are better planners under ambiguity rather than under risk. Our results extend the often observed pattern of individuals (groups) behaving more optimally under risk (ambiguity),to its dynamic dimension. JEL classification: C91, C92, D11, D91, E21
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Journal of Economic Methodology, 2016
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SSRN Electronic Journal, 2000
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Neoclassical economics assumes that individuals have stable and context-independent preferences, ... more Neoclassical economics assumes that individuals have stable and context-independent preferences, and uses preference-satisfaction as a normative criterion. By calling this assumption into question, behavioural findings cause fundamental problems for normative economics. A common response to these problems is to treat deviations from conventional rational-choice theory as mistakes, and to try to reconstruct the preferences that individuals would have acted on, had they reasoned correctly. We argue that this preference purification approach implicitly uses a dualistic model of the human being, in which an inner rational agent is trapped in an outer psychological shell. This model is psychologically and philosophically problematic.
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We present the results of an experiment comparing group and individual planning in the domain of ... more We present the results of an experiment comparing group and individual planning in the domain of lifecycle consumption/saving decisions. Individual decision making is compared to two group treatments, which differ based on the presence of a rematching rule. We find that individuals and groups differ in how they solve the intertemporal consumption problem, but not in how they improve their consumption planning within a sequence. Individuals' performance improves across sequences, groups without rematching perform approximately the same, while groups with rematching do significantly worse. Our main finding is that while groups perform better than individuals in the first sequence, this difference seems to disappear in the second lifecycle. Results show that in the second sequence groups in the rematching treatment deviate substantially more from optimum than groups that are left stable across sequences.
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Experiments on intertemporal consumption typically show that people have difficulties in optimall... more Experiments on intertemporal consumption typically show that people have difficulties in optimally solving such problems. Previous studies have focused on contexts in which agents are faced with risky future incomes and have to plan over long horizons. We present an experiment comparing decision making under certainty, risk, and ambiguity, over a shorter lifecycle. Results show that behavior in the ambiguity treatment is markedly different than in the risk condition and it is characterized by a significant pattern of under-consumption.
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Conference Presentations by Gerardo Infante
Neoclassical economics assumes that individuals have stable and context-independent preferences, ... more Neoclassical economics assumes that individuals have stable and context-independent preferences, and uses preference-satisfaction as a normative criterion. By calling this assumption into question, behavioural findings cause fundamental problems for normative economics. A common response to these problems is to treat deviations from conventional
rational-choice theory as mistakes, and to try to reconstruct the preferences that individuals would have acted on, had they reasoned correctly. We argue that this preference purification approach implicitly uses a dualistic model of the human being, in which an inner rational agent is trapped in an outer psychological shell. This model is psychologically and philosophically problematic.
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Experiments on intertemporal consumption typically show that people have difficulties in optimall... more Experiments on intertemporal consumption typically show that people have difficulties in optimally solving this kind of problems. Previous studies have focused on contexts in which agents are faced with risk on future income and have to plan over long horizons. We present an experiment comparing decision making under certainty, risk and ambiguity, over a shorter life-cycle. Results show that planning in the ambiguity treatment is markedly different than in the risk condition and it is characterized by a significant pattern of under-consumption.
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We present the results of an experiment comparing group and individual planning in the domain of ... more We present the results of an experiment comparing group and individual planning in the domain of life-cycle consumption/saving decisions. Individual decision making is compared to two group treatments, which differ for the presence of a re-matching rule. Our findings show that 1) individuals and groups differ in how they solve the intertemporal consumption problem, but not in how they improve their planning within a sequence; 2) in the first life-cycle groups deviate significantly less from optimum; 3) groups are unable to improve their decision making in the second sequence; 4) re-matching groups may have a detrimental effect on subsequent performance. These results offer new insights into the comparison of individual and groups, revealing the importance of the stability of the decision maker on the efficiency of planning.
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Over the last ten years the literature in experimental economics has seen a growing interest in ... more Over the last ten years the literature in experimental economics has seen a growing interest in groups and how they compare to individuals in different settings. This paper contributes to the literature on this topic by investigating the comparison between groups and individuals with respect to intertemporal consumption problems. Empirical evidence has shown how dynamic optimization problems, representing intertemporal consumption decisions, involve computational difficulties that agents are not always equipped to solve optimally. Several econometric estimations on household and aggregate data seem to show that people do not save enough. Similarly, in many experiments, results suggest that people are very different in how they solve this class of problems and in how they react to changes in the decision environment. We present an experiment comparing group and individual planning under risk and uncertainty. Our study is focussed on investigating how groups perform in intertemporal decision making tasks, in particular observing the significance of group planning compared to individuals when choosing under risk and uncertainty. Results suggest that groups perform better than individuals when planning under risk, while the opposite happens in the case of planning under uncertainty. Interestingly, when comparing the behaviour of our agents in the second lifecycle (denominated ''sequence'') groups seem to lose all their advantage on individuals (in terms of less deviation from optimum). We interpret this as a ''stability effect'' caused by the random matching rule adopted during the groups sessions.
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Teaching Documents by Gerardo Infante
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Papers by Gerardo Infante
Conference Presentations by Gerardo Infante
rational-choice theory as mistakes, and to try to reconstruct the preferences that individuals would have acted on, had they reasoned correctly. We argue that this preference purification approach implicitly uses a dualistic model of the human being, in which an inner rational agent is trapped in an outer psychological shell. This model is psychologically and philosophically problematic.
Teaching Documents by Gerardo Infante
rational-choice theory as mistakes, and to try to reconstruct the preferences that individuals would have acted on, had they reasoned correctly. We argue that this preference purification approach implicitly uses a dualistic model of the human being, in which an inner rational agent is trapped in an outer psychological shell. This model is psychologically and philosophically problematic.