Kirill Borisov, Professor of the Faculty of Economics, and his colleagues have published a new article "Cooperating with yourself" in the journal "Games and Economic Behavior". By the way, one of the authors of the article is Mikhail Pakhnin, himself a graduate of the Faculty of Economics.
The article examines the problem of temporal inconsistency in decision-making that affects the choice of savings and the level of well-being. A situation is simulated where a person has different selves at different points in time (today's self and a future self) that can cooperate with each other to make better decisions. These Selves can cooperate with each other at different times or act independently of each other.
The authors describe two strategies for cooperation:
- The golden rule is when the current self behaves with future selves as it would like future selves to behave with him.
- The Kantian approach is when the current self behaves as it would like all future selves to behave.
These cooperative strategies are compared to non-cooperative strategies, when the selves act independently of each other.
The results show that cooperation leads to greater savings and higher welfare compared to non-cooperative behavior. Furthermore, the golden rule gives higher savings than the Kantian approach.
Overall, the work demonstrates that a person's ability to negotiate with themselves and cooperate with themselves over time can improve their financial decisions and well-being.