TY  - JOUR
AU  - Bolton,Patrick
AU  - Faure-Grimaud,Antoine
TI  - Thinking Ahead: The Decision Problem
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 11867
PY  - 2005
Y2  - December 2005
UR  - http://www.nber.org/papers/w11867
L1  - http://www.nber.org/papers/w11867.pdf
N1  - Author contact info:
Patrick Bolton
Columbia Business School
804 Uris Hall
New York, NY 10027
Tel: 212/854-9245
Fax: 212/854-8059
E-Mail: pb2208@columbia.edu

Antoine Faure-Grimaud
Financial Markets Group
London School of Economics
E-Mail: A.Faure-Grimaud@lse.ac.uk
AB  - We propose a model of bounded rationality based on time-costs of deliberating current and future decisions. We model an individual decision maker%u2019s thinking process as a thought-experiment that takes time and let the decision maker %u201Cthink ahead%u201D about future decision problems in yet unrealized states of nature. By formulating an intertemporal, state-contingent, planning problem, which may involve costly deliberation in every state of nature, and by letting the decision-maker deliberate ahead of the realization of a state, we attempt to capture the basic idea that individuals generally do not think through a complete action-plan. Instead, individuals prioritize their thinking and leave deliberations on less important decisions to the time or event when they arise.
ER  -