Temptation

Barton L. Lipman, Wolfgang Pesendorfer

Research output: Chapter in Book/Report/Conference proceedingChapter

7 Scopus citations

Abstract

This survey discusses decision-theoretic models of agents who seek to constrain and regulate their own future behavior. The common theme is that the decision make‘s future utility is affected by unwanted temptations. The wish to eliminate temptations from future option sets creates a preference for commitment. The surveyed models explore the relationship between temptations and other psychological phenomena, such as self-control, self-deception, guilt, and shame. An experimental literature in psychology and economics approached these phenomena with different experimental designs, broadly classified into experiments that document choice reversals and those that document a preference for commitment. The first approach confronts subjects with a particular choice at distinct decision dates. If choices at the time of consumption are affected by unwanted temptation, then we would expect the choice at the time of consumption to differ from the same choice made at an earlier stage. A large experimental literature, surveyed in Frederick, Loewenstein, and O‘Donoghue (2002), examines such reversals for intertemporal choices. Specifically, subjects are asked to choose between a smaller period t reward and a larger period t + τ reward. Subjects tend to prefer the smaller reward when t is small but the larger reward when t is large. If the subjects’ behavior is stationary, this evidence implies that the same intertemporal trade-off is resolved differently depending on when the decision is made.

Original languageEnglish (US)
Title of host publicationAdvances in Economics and Econometrics
Subtitle of host publicationTenth World Congress, Volume I: Economic Theory
PublisherCambridge University Press
Pages243-288
Number of pages46
ISBN (Electronic)9781139060011
ISBN (Print)9781107016040
DOIs
StatePublished - Jan 1 2011

All Science Journal Classification (ASJC) codes

  • Economics, Econometrics and Finance(all)

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