Consider the example given on pages 3-12 and 3-13. Suppose $k_{v}=k_{c}=0$, 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 naif violates the dominance property.

Question

Quizplus · Accepted Answer

The naif chooses the first time period as dominance requires.

Consider the Example Given on Pages 3-12 and 3-13 kv=kc=0k_{v}=k_{c}=0kv​=kc​=0 , That Is Both Costs and Rewards Are Immediate

Consider the Example Given on Pages 3-12 and 3-13 $k_{v}=k_{c}=0$ , That Is Both Costs and Rewards Are Immediate