Strategic Ignorance as a Self-Disciplining Device

Posted: 30 Dec 2000

See all articles by Juan D. Carrillo

Juan D. Carrillo

University of Southern California - Department of Economics; Centre for Economic Policy Research (CEPR)

Thomas Mariotti

University of Toulouse I

Abstract

We analyze 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 learnedvia 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.

Suggested Citation

Carrillo, Juan D. and Mariotti, Thomas, Strategic Ignorance as a Self-Disciplining Device. Available at SSRN: https://ssrn.com/abstract=239295

Juan D. Carrillo (Contact Author)

University of Southern California - Department of Economics ( email )

3022 S. Vermont Ave.
Los Angeles, CA 90089
United States
213-740-3526 (Phone)
213-740-8543 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Thomas Mariotti

University of Toulouse I ( email )

Toulouse, 31000
France

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