Dynamic decision making: what do people do?

Potentially dynamically-inconsistent individuals create particular problems for economics, as their behaviour depends upon whether and how they attempt to resolve their potential inconsistency. In this article we report on the results of a new experiment designed to help us distinguish between the different types that may exist and that we classify in myopic, naïve, resolute and sophisticated. We implement a new 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 allows us to classify the subjects. We find that the majority are resolute, a significant few are sophisticated, rather few are naïve and similarly few are myopic.