Abstract
We propose nonparametric definitions of absolute and comparative naiveté. These definitions
leverage both ex-ante choice of menu to identify individuals' projections of their
future behavior and ex-post choice from menus to identify their actual behavior. Their
main advantage is their independence from any assumed functional form for the utility
function representing behavior. An individual is sophisticated if she is indifferent
between choosing from a menu ex post or committing to the actual choice from that
menu ex ante. She is naive if she prefers the flexibility in the menu, reflecting
a mistaken belief that she will act more virtuously than she actually will. One individual
is more naive than another if she is both more optimistic about her future behavior
while actually being less virtuous. In the case of Strotzian preferences, absolute
naiveté implies that beliefs are a convex combination of virtuous and temptation utility,
while comparative naiveté implies that the more naive individual's beliefs puts more
weight than a more sophisticated individual on her virtuous utility, while her actual
behavior puts more weight on the temptation utility. In different specifications of
the underlying Strotzian preferences, such as quasi-hyperbolic discounting, the definitions
impose further intuitive restrictions, such as inequalities on believed and actual
present-bias factors. We propose suitable definitions for random choice. Finally,
we discuss the implications of naiveté for welfare and the design of commitment devices.
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