Consider the example given on pages 3-12 and 3-13. Suppose $k_{v}=k_{c}=1$, that is both costs and rewards are immediate. Let the remaining parameters be unchanged, so that $v_{t}=$ $\{8,20,0\}, c_{t}=\{0,9,1\}, \beta=\frac{1}{2}, \delta=1$. In this setting, the sophisticate obeys the dominance property.

Question

Quizplus · Accepted Answer

The sophisticate chooses the second period, whereas the dominance property requires that the first period be chosen.

Consider the Example Given on Pages 3-12 and 3-13 kv=kc=1k_{v}=k_{c}=1kv​=kc​=1 , That Is Both Costs and Rewards Are Immediate

Consider the Example Given on Pages 3-12 and 3-13 $k_{v}=k_{c}=1$ , That Is Both Costs and Rewards Are Immediate