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An Economic Theory of Self-Control

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  • Thaler, Richard H
  • Shefrin, H M

Abstract

Although many economists, most notably Strotz, have discussed dynamic inconsistency and precommitment, none have dealt directly with the essence of the problem: self-control. This paper attempts to fill that gap by modeling man as an organization. The Strotz model is recast to include the control features missing in his formulation. The organizational analogy permits us to draw on the theory of agency. We thus relate the individual's control problems with those that exist in agency relationships.
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  • Thaler, Richard H & Shefrin, H M, 1981. "An Economic Theory of Self-Control," Journal of Political Economy, University of Chicago Press, vol. 89(2), pages 392-406, April.
    • Handle: RePEc:ucp:jpolec:v:89:y:1981:i:2:p:392-406
    DOI: 10.1086/260971
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    1. Charles Blackorby & David Nissen & Daniel Primont & R. Robert Russell, 1973. "Consistent Intertemporal Decision Making," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 40(2), pages 239-248.
    2. Bezalel Peleg & Menahem E. Yaari, 1973. "On the Existence of a Consistent Course of Action when Tastes are Changing," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 40(3), pages 391-401.
    3. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    4. Ross, Stephen A, 1973. "The Economic Theory of Agency: The Principal's Problem," American Economic Review, American Economic Association, vol. 63(2), pages 134-139, May.
    5. Peter J. Hammond, 1976. "Changing Tastes and Coherent Dynamic Choice," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 43(1), pages 159-173.
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