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Costly Self Control and Random Self Indulgence

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  • Barton L. Lipman

    (Department of Economics, Boston University.)

  • Eddie Dekel

    (Economics Dept., Northwestern University, and School of Economics, Tel Aviv University)

Abstract

We study the random Strotz model, a version of the Strotz (1955) model with uncer- tainty about the nature of the temptation that will strike. We show that the random Strotz representation is unique and characterize a comparative notion of \more temp- tation averse." Also, we demonstrate an unexpected connection between the random Strotz model and a generalization of the Gul{Pesendorfer (GP) (2001) model of temp- tation which allows for the temptation to be uncertain and which we call random GP. In particular, a preference over menus has a random GP representation i it also has a representation via a random Strotz model with suciently smooth uncertainty about the intensity of temptation. We also show that choices of menus combined with choices from menus can distinguish the random GP and random Strotz models.

Suggested Citation

  • Barton L. Lipman & Eddie Dekel, 2010. "Costly Self Control and Random Self Indulgence," Boston University - Department of Economics - Working Papers Series WP2010-020, Boston University - Department of Economics.
    • Handle: RePEc:bos:wpaper:wp2010-020
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    References listed on IDEAS

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