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Research Highlights

Costly Self-Control and Limited Willpower (with Simon Grant and Sung-Lin Hsieh, published in ECONOMIC THEORY)

  • Author Meng-Yu Liang
    Simon Grant
    Sung-Lin Hsieh
  • Abstract In Gul and Pesendorfer (2001), a decision-maker, when facing a choice among menus, evaluates each menu in terms of the maximum value of its commitment utility net of self-control costs. This paper extends the model such that this maximum is constrained by the condition that the cost of self-control cannot exceed the decision-maker's stock of willpower w. In our characterization, choices within menus that satisfy WARP reveal a constant trade-off between commitment and temptation utilities. However, it is the discontinuity of preferences over menus (along with violations of WARP for choices within menus) that reveals w (measured in units of temptation utility), allowing for a behaviorally meaningful comparative measure of self-control across individuals.
  • Link https://link.springer.com/article/10.1007/s00199-019-01231-6(Open New Window)