Eddie Dekel () (Department of Economics, Northwestern University) Barton L. Lipman () (Department of Economics, Boston University) Aldo Rustichini () (4University of Minnesota)
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“My own behavior baffles me. For I find myself not doing what I really want to do but doing what I really loathe.” Saint Paul What behavior can be explained using the hypothesis that the agent faces temptation but is otherwise a “standard rational agent”? In earlier work, Gul–Pesendorfer [2001] use a set betweenness axiom to restrict the set of preferences considered by Dekel, Lipman, and Rustichini [2001] to those explainable via temptation. We argue that set betweenness rules out plausible and interesting forms of temptation. We propose a pair of alternative axioms called DFC, desire for commitment, and AIC, approximate improvements are chosen. DFC characterizes temptation as situations where given any set of alternatives, the agent prefers committing herself to some particular item from the set rather than leaving herself the flexibility of choosing later. AIC says that if adding an option to a menu improves the menu, it is because that option is chosen under some circumstances. We show that these axioms characterize a natural generalization of the Gul–Pesendorfer representation.
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Length: 31pages Date of creation: May 2006 Date of revision: Publication status: forthcoming, Review of Economic Studies Handle: RePEc:bos:wpaper:wp2006-024
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Manuel Amador & Iván Werning & George-Marios Angeletos, 2006.
"Commitment vs. Flexibility,"
Econometrica,
Econometric Society, vol. 74(2), pages 365-396, 03.
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Manuel Amador & Ivan Werning & George-Marios Angeletos, 2003.
"Commitment Vs. Flexibility,"
NBER Working Papers
10151, National Bureau of Economic Research, Inc.
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