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A Dual-Self Model of Impulse Control

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  • Fudenberg, Drew
  • Levine, David

Abstract

We propose that a simple “dual-self†model gives a unified explanation for several empirical regularities, including the apparent time inconsistency that has motivated models of quasi-hyperbolic discounting and Rabin's paradox of risk aversion in the large and small. The model also implies that self-control costs imply excess delay, as in the O'Donoghue and Rabin models of quasi-hyperbolic utility, and it explains experimental evidence that increased cognitive load makes temptations harder to resist. The base version of our model is consistent with the Gul-Pesendorfer axioms, but we argue that these axioms must be relaxed to account for the effect of cognitive load.

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Bibliographic Info

Paper provided by Harvard University Department of Economics in its series Scholarly Articles with number 3196335.

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Date of creation: 2006
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Publication status: Published in American Economic Review
Handle: RePEc:hrv:faseco:3196335

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  1. Christopher Harris & David Laibson, 2013. "Instantaneous Gratification," The Quarterly Journal of Economics, Oxford University Press, Oxford University Press, vol. 128(1), pages 205-248.
  2. Faruk Gul & Wolfgang Pesendorfer, 2004. "Self Control, Revealed Preferences and Consumption Choice," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 7(2), pages 243-264, April.
  3. Malmendier, Ulrike M. & Della Vigna, Stefano, 2003. "Overestimating Self-Control: Evidence from the Health Club Industry," Research Papers, Stanford University, Graduate School of Business 1800, Stanford University, Graduate School of Business.
  4. Drazen Prelec, 2004. "Decreasing Impatience: A Criterion for Non-stationary Time Preference and "Hyperbolic" Discounting," Scandinavian Journal of Economics, Wiley Blackwell, Wiley Blackwell, vol. 106(3), pages 511-532, October.
  5. Benhabib, Jess & Bisin, Alberto, 2005. "Modeling internal commitment mechanisms and self-control: A neuroeconomics approach to consumption-saving decisions," Games and Economic Behavior, Elsevier, Elsevier, vol. 52(2), pages 460-492, August.
  6. Laibson, David I., 2000. "A Cue-Theory of Consumption," Scholarly Articles, Harvard University Department of Economics 4481496, Harvard University Department of Economics.
  7. Eddie Dekel, 1997. "A Unique Subjective State Space for Unforeseen Contingencies," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 1202, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  8. Junjian Miao, 2005. "Option Exercise with Temptation," Boston University - Department of Economics - Working Papers Series, Boston University - Department of Economics WP2005-007, Boston University - Department of Economics.
  9. Per Krusell & Burhanettin Kuruşçu & Anthony A. Smith Jr., 2010. "Temptation and Taxation," Econometrica, Econometric Society, Econometric Society, vol. 78(6), pages 2063-2084, November.
  10. Stefano Della Vigna & Ulrike Malmendier, 2004. "Contract Design and Self-control: Theory and Evidence," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 119(2), pages 353-402, May.
  11. Ted O'Donoghue & Matthew Rabin, 2001. "Choice And Procrastination," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 116(1), pages 121-160, February.
  12. Jawwad Noor, 2005. "Temptation, Welfare and Revealed Preference," Microeconomics, EconWPA 0509009, EconWPA.
  13. Faruk Gul & Wolfgang Pesendorfer, 2001. "Temptation and Self-Control," Econometrica, Econometric Society, Econometric Society, vol. 69(6), pages 1403-1435, November.
  14. Rabin, Matthew, 2000. "Risk Aversion and Expected-Utility Theory: A Calibration Theorem," Department of Economics, Working Paper Series, Department of Economics, Institute for Business and Economic Research, UC Berkeley qt731230f8, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  15. W. Pesendorfer & F. Gul, 1999. "Self-Control and the Theory of Consumption," Princeton Economic Theory Papers, Economics Department, Princeton University 99f2, Economics Department, Princeton University.
  16. B. Douglas Bernheim & Antonio Rangel, 2004. "Addiction and Cue-Triggered Decision Processes," American Economic Review, American Economic Association, American Economic Association, vol. 94(5), pages 1558-1590, December.
  17. Drew Fudenberg & David K. Levine, 1998. "Learning in Games," Levine's Working Paper Archive, David K. Levine 2222, David K. Levine.
  18. Laibson, David I., 1997. "Golden Eggs and Hyperbolic Discounting," Scholarly Articles, Harvard University Department of Economics 4481499, Harvard University Department of Economics.
  19. Drew Fudenberg & David K. Levine, 1998. "The Theory of Learning in Games," MIT Press Books, The MIT Press, The MIT Press, edition 1, volume 1, number 0262061945, December.
  20. Loewenstein, George, 1996. "Out of Control: Visceral Influences on Behavior," Organizational Behavior and Human Decision Processes, Elsevier, Elsevier, vol. 65(3), pages 272-292, March.
  21. Shiv, Baba & Fedorikhin, Alexander, 1999. " Heart and Mind in Conflict: The Interplay of Affect and Cognition in Consumer Decision Making," Journal of Consumer Research, University of Chicago Press, University of Chicago Press, vol. 26(3), pages 278-92, December.
  22. Thaler, Richard H & Shefrin, H M, 1981. "An Economic Theory of Self-Control," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 89(2), pages 392-406, April.
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