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Learning Self-Control

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  • S. Nageeb Ali

Abstract

This article examines how a decision maker who is only partially aware of his temptations learns about them over time. In facing temptations, individuals use their experience to forecast future self-control problems and choose the appropriate level of commitment. I demonstrate that rational learning can be perpetually partial and need not result in full sophistication. The main result of this article characterizes necessary and sufficient conditions for learning to converge to full sophistication. I apply this result to a consumption-savings environment in which a decision maker is tempted by present bias and establish a learning-theoretic justification for assuming sophistication in this setting. "An individual who finds himself continuously repudiating his past plans may learn to distrust his future behavior, and may do something about it." -- Copyright 2011, Oxford University Press.

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Paper provided by David K. Levine in its series Levine's Working Paper Archive with number 814577000000000384.

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Date of creation: 10 Nov 2009
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Handle: RePEc:cla:levarc:814577000000000384

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Cited by:
  1. Dan Acland & Matthew Levy, 2013. "Naivete, projection bias, and habit formation in gym attendance," LSE Research Online Documents on Economics 46827, London School of Economics and Political Science, LSE Library.
  2. Luca Benati & Thomas A Lubik, 2012. "Sales, Inventories, and Real Interest Rates: A Century of Stylized Facts," CAMA Working Papers 2012-19, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  3. Berno Buechel & Lydia Mechtenberg & Julia Petersen, 2014. "Peer Effects and Students’ Self-Control," SFB 649 Discussion Papers SFB649DP2014-024, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
  4. Serena Ng & Jonathan H. Wright, 2013. "Facts and Challenges from the Great Recession for Forecasting and Macroeconomic Modeling," Journal of Economic Literature, American Economic Association, vol. 51(4), pages 1120-54, December.
  5. Paul Heidhues & Botond Koszegi, 2010. "Exploiting Naivete about Self-Control in the Credit Market," American Economic Review, American Economic Association, vol. 100(5), pages 2279-2303, December.
  6. Parsons, Christopher A. & Van Wesep, Edward D., 2013. "The timing of pay," Journal of Financial Economics, Elsevier, vol. 109(2), pages 373-397.
  7. Alos Ferrer, Carlos, 2013. "Think, but Not Too Much: A Dual-Process Model of Willpower and Self-Control," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 80019, Verein für Socialpolitik / German Economic Association.
  8. Ryota Nakamura & Marc Suhrcke & Daniel John Zizzo, 2014. "A Triple Test for Behavioral Economics Models and Public Health Policy," Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) 14-01, School of Economics, University of East Anglia, Norwich, UK..

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