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Temptation–Driven Preferences

  • Eddie Dekel


    (Department of Economics, Northwestern University)

  • Barton L. Lipman


    (Department of Economics, Boston University)

  • Aldo Rustichini


    (4University of Minnesota)

“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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Paper provided by Boston University - Department of Economics in its series Boston University - Department of Economics - Working Papers Series with number WP2006-024.

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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
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  1. Jawwad Noor & Norio Takeoka, 2011. "Menu-Dependent Self-Control," Boston University - Department of Economics - Working Papers Series WP2011-041, Boston University - Department of Economics.
  2. David K. Levine & Drew Fudenberg, 2006. "A Dual-Self Model of Impulse Control," American Economic Review, American Economic Association, vol. 96(5), pages 1449-1476, December.
  3. Manuel Amador & George-Marios Angeletos & Ivan Werning, 2004. "Commitment vs. Flexibility," 2004 Meeting Papers 87, Society for Economic Dynamics.
  4. Jawwad Noor, 2007. "Temptation, Welfare and Revealed Preference," Boston University - Department of Economics - Working Papers Series WP2007-008, Boston University - Department of Economics.
  5. Todd Sarver, 2008. "Anticipating Regret: Why Fewer Options May Be Better," Econometrica, Econometric Society, vol. 76(2), pages 263-305, 03.
  6. Dekel, Eddie & Lipman, Barton L & Rustichini, Aldo, 2001. "Representing Preferences with a Unique Subjective State Space," Econometrica, Econometric Society, vol. 69(4), pages 891-934, July.
  7. Faruk Gul & Wolfgang Pesendorfer, 2001. "Temptation and Self-Control," Econometrica, Econometric Society, vol. 69(6), pages 1403-1435, November.
  8. Haluk Ergin & Todd Sarver, 2010. "A Unique Costly Contemplation Representation," Econometrica, Econometric Society, vol. 78(4), pages 1285-1339, 07.
  9. John C. Harsanyi, 1955. "Cardinal Welfare, Individualistic Ethics, and Interpersonal Comparisons of Utility," Journal of Political Economy, University of Chicago Press, vol. 63, pages 309.
  10. Machina, Mark J, 1989. "Dynamic Consistency and Non-expected Utility Models of Choice under Uncertainty," Journal of Economic Literature, American Economic Association, vol. 27(4), pages 1622-68, December.
  11. Peter A. Diamond, 1967. "Cardinal Welfare, Individualistic Ethics, and Interpersonal Comparison of Utility: Comment," Journal of Political Economy, University of Chicago Press, vol. 75, pages 765.
  12. repec:ubc:bricol:90-03 is not listed on IDEAS
  13. Kreps, David M, 1979. "A Representation Theorem for "Preference for Flexibility"," Econometrica, Econometric Society, vol. 47(3), pages 565-77, May.
  14. Eddie eckel & Barton L Lipman & Aldo Rustichini & Todd Sarver, 2005. "Representing Preferences with a Unique Subjective State Space: Corrigendum," Boston University - Department of Economics - Working Papers Series WP2005-042, Boston University - Department of Economics.
  15. Kopylov Igor, 2009. "Temptations in General Settings," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 9(1), pages 1-25, September.
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