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Commitment to Self-Rewards

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Author Info
Koch, Alexander K. () (University of Aarhus)
Nafziger, Julia () (University of Aarhus)

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Abstract

Self-administered rewards are ubiquitous. They serve as incentives for personal accomplish¬ments and are widely recommended as tools for overcoming self-control problems. However, it seems puzzling why self-rewards can work: the prospect of a reward has a motivating force only if the threat of self-denial of the reward after low performance is credible. We explain how a rational forward-looking individual may achieve commitment to self-rewards, by applying Köszegi and Rabin's (2006) model of endogenous reference point formation to a self-regulation problem. Our results show why and when self-regulation built on self-rewards can be successful and thus illustrate the power, but also the limits, of self-rewards.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4049.

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Date of creation: Feb 2009
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Handle: RePEc:iza:izadps:dp4049

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Related research
Keywords: time inconsistency; self-reinforcement; motivation; self-control; reference-dependent preferences;

Find related papers by JEL classification:
A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law

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This page was last updated on 2009-11-30.

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