Temptation, Welfare and Revealed Preference
Temptation is the conflict between one’s desires (temptation preference) and one’s view of what choices he should make (normative preference). In seminal work, Gul and Pesendorfer [7, 8] provide foundations for a model of temptation on the basis of the idea that temptation creates a preference for commitment. This paper studies agents for whom temptation may in fact create the absence of a preference for commitment. 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 inferred from discrepancies between normative preference and choice. With a choice correspondence as the primitive, agents who are .tempted not to commit’ are modeled. The foundations of the model are used to identify evidence supporting such temptation. It is argued that normative preference serves as an appropriate guide for welfare policy.
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|Date of creation:||Feb 2007|
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