Temptation, Welfare and Revealed Preference
Abstract
Choice may be determined both by a consideration of one?s welfare (normative preference) and by desires (temptation preference). To provide foundations for such a theory, Gul and Pesendorfer [7, 8] adopt a preference over choice problems as a primitive and hypothesize that temptation creates a preference for commit- ment. This paper argues that temptation may in fact create the absence of a preference for commitment, and that the primitive may not be empirically mean- ingful since it requires us to observe behavior in the absence of temptation. An alternative approach to providing foundations is introduced. Motivated by the evidence on preference reversals, it is hypothesized that delayed temptations are easier to resist than immediate temptations. Normative preference is derived via choices between sufficiently delayed alternatives, and temptation preference is in- ferred from discrepancies between normative preference and choice. With a choice correspondence as the primitive, agents who are ?tempted not to commit?are mod- eled. The foundations of the model are used to identify evidence supporting such temptation.Download Info
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Paper provided by Boston University - Department of Economics in its series Boston University - Department of Economics - Working Papers Series with number WP2006-025.Length: 60pages
Date of creation: Apr 2006
Date of revision:
Handle: RePEc:bos:wpaper:wp2006-025
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Related research
Keywords: Self-Control; Temptation; Commitment; Preference Reversals; Re- vealed Preference.;Find related papers by JEL classification:
- D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
- D60 - Microeconomics - - Welfare Economics - - - General
References
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- Jawwad Noor, 2006. "Menu-Dependent Self-Control," Levine's Bibliography 122247000000001061, UCLA Department of Economics.
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