The Absent-Minded Driver

The example of the "absent-minded driver" was introduced by Piccione and Rubinstein in the context of games and decision problems with imperfect recall. They claim that a "paradox" or "inconsistency" arises when the decision reached at the "planning stage" is compared with that at the "action stage." Though the example is provocative and worth having, their analysis is questionable. A careful analysis reveals that while the considerations at the planning and action stages do differ, there is no paradox or inconsistency.Journal of Economic LiteratureClassification Numbers: D81, C72.