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Temptation, Welfare and Revealed Preference

Listed author(s):
  • Jawwad Noor

    (Boston University)

Choice may be determined both by a consideration of one's welfare (normative preference) and by desires (temptation preference). To provide foundations for such a theory, Gul and Pesendorfer (2001, 2004) adopt a preference over choice problems as a primitive and hypothesize that temptation creates a preference for commitment. This paper argues that temptation may in fact create the absence of a preference for commitment, and that the primitive may not be empirically meaningful since it requires us to observe behavior in the absence of temptation. 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.

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File URL: http://econwpa.repec.org/eps/mic/papers/0509/0509009.pdf
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Paper provided by EconWPA in its series Microeconomics with number 0509009.

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Length: 63 pages
Date of creation: 28 Sep 2005
Handle: RePEc:wpa:wuwpmi:0509009
Note: Type of Document - pdf; pages: 63
Contact details of provider: Web page: http://econwpa.repec.org

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