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Goal Setting as a Self-Regulation Mechanism

Author

Listed:
  • Anton Suvorov

    (CEFIR, NES)

  • Jeroen van de Ven

Abstract

We develop a theory of self-regulation based on goal setting for an agent with present-biased preferences. Preferences are assumed to be reference-dependent and exhibit loss aversion, as in prospect theory. The reference point is determined endogenously as an optimal self-sustaining goal. The interaction between hyperbolic discounting and loss aversion makes goals a credible and effective instrument for self-regulation. This is an entirely internal commitment device that does not rely on reputation building. We show that in some cases it is optimal to engage in indulgent behavior, and sometimes it is optimal to set seemingly dysfunctional goals. Finally, we derive a condition under which proximal (short term) goals are better than distal (long term) goals. Our results provide an implicit evolutionary rationale for the existence of loss aversion as a means of self-control.

Suggested Citation

  • Anton Suvorov & Jeroen van de Ven, 2008. "Goal Setting as a Self-Regulation Mechanism," Working Papers w0122, Center for Economic and Financial Research (CEFIR).
    • Handle: RePEc:cfr:cefirw:w0122
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    Cited by:

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    2. Damon Clark & David Gill & Victoria Prowse & Mark Rush, 2020. "Using Goals to Motivate College Students: Theory and Evidence From Field Experiments," The Review of Economics and Statistics, MIT Press, vol. 102(4), pages 648-663, October.
    3. Koch, Alexander K. & Nafziger, Julia, 2021. "Motivational goal bracketing with non-rational goals," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 94(C).
    4. Koch, Alexander K. & Nafziger, Julia, 2016. "Goals and bracketing under mental accounting," Journal of Economic Theory, Elsevier, vol. 162(C), pages 305-351.
    5. Holger Stichnoth, 2013. "Reference standards for income comparisons: evidence from immigrants' return visits," Economics Bulletin, AccessEcon, vol. 33(4), pages 2707-2717.
    6. Koch, Alexander K. & Nafziger, Julia & Suvorov, Anton & van de Ven, Jeroen, 2014. "Self-rewards and personal motivation," European Economic Review, Elsevier, vol. 68(C), pages 151-167.
    7. Andrieş, Alin Marius & Walker, Sarah, 2023. "When the message hurts: The unintended impacts of nudges on saving," Journal of Comparative Economics, Elsevier, vol. 51(2), pages 439-456.
    8. repec:hum:wpaper:sfb649dp2014-024 is not listed on IDEAS
    9. Reinstein, David, 2014. "The Economics of the Gift," Economics Discussion Papers 10009, University of Essex, Department of Economics.
    10. Gómez Miñambres, Joaquín, 2011. "Make it challenging : motivation through goal setting," UC3M Working papers. Economics we1123, Universidad Carlos III de Madrid. Departamento de Economía.
    11. Young, Benjamin, 2024. "Expectations or rational expectations? A theory of systematic goal deviation," Journal of Economic Behavior & Organization, Elsevier, vol. 219(C), pages 25-37.
    12. Hsiaw, Alice, 2013. "Goal-setting and self-control," Journal of Economic Theory, Elsevier, vol. 148(2), pages 601-626.
    13. Koch, Alexander K. & Nafziger, Julia, 2020. "Motivational goal bracketing: An experiment," Journal of Economic Theory, Elsevier, vol. 185(C).
    14. KAYABA, Yutaka & 萱場, 豊, 2016. "How do People Procrastinate to Meet a Deadline?," Discussion paper series HIAS-E-33, Hitotsubashi Institute for Advanced Study, Hitotsubashi University.
    15. Buechel, Berno & Mechtenberg, Lydia & Petersen, Julia, 2014. "Peer Effects and Students’ Self-Control," MPRA Paper 53658, University Library of Munich, Germany.
    16. Jonas Pilgaard Kaiser & Alexander K. Koch & Julia Nafziger, 2024. "Does goal revision undermine self-regulation through goals? An experiment," Experimental Economics, Springer;Economic Science Association, vol. 27(3), pages 604-636, July.
    17. Banuri, Sheheryar & Danková, Katarína & Keefer, Philip, 2024. "An experimental test of gaming incentives," Journal of Economic Behavior & Organization, Elsevier, vol. 224(C), pages 825-850.
    18. van Lent, Max & Souverijn, Michiel, 2020. "Goal setting and raising the bar: A field experiment," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 87(C).
    19. Burger, Nicholas & Charness, Gary & Lynham, John, 2011. "Field and online experiments on self-control," Journal of Economic Behavior & Organization, Elsevier, vol. 77(3), pages 393-404, March.
    20. Koch, Alexander K. & Nafziger, Julia, 2009. "Motivational Goal Bracketing," IZA Discussion Papers 4471, Institute of Labor Economics (IZA).
    21. Koch, Alexander K. & Nafziger, Julia, 2011. "Goals and Psychological Accounting," IZA Discussion Papers 5802, Institute of Labor Economics (IZA).
    22. Max van Lent & Michiel Souverijn, 2017. "Goal Setting and Raising the Bar: A Field Experiment," Tinbergen Institute Discussion Papers 17-001/VII, Tinbergen Institute.
    23. Nafziger, Julia & Kaiser, Jonas P. & Koch, Alexander K, 2021. "Self-Set Goals Are Effective Self-Regulation Tools -- Despite Goal Revision," CEPR Discussion Papers 15716, C.E.P.R. Discussion Papers.
    24. repec:esx:essedp:749 is not listed on IDEAS

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    More about this item

    Keywords

    self-regulation; goals; time inconsistency; loss aversion; indulgence; compulsiveness; proximal and distal;
    All these keywords.

    JEL classification:

    • D00 - Microeconomics - - General - - - General
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General

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