A Dual-Self Model of Impulse Control

American Economic Review · 2006 · Volume 96 · Issue 5

Abstract

We propose that a simple dual-self model gives a unified explanation for several empirical regularities, including the apparent time inconsistency that has motivated models of quasi-hyperbolic discounting and Rabins paradox of risk aversion in the large and small. The model also implies that self-control costs imply excess delay, as in the ODonoghue and Rabin models of quasi-hyperbolic utility, and it explains experimental evidence that increased cognitive load makes temptations harder to resist. The base version of our model is consistent with the Gul-Pesendorfer axioms, but we argue that these axioms must be relaxed to account for the effect of cognitive load. (JEL D11, D81)

Keywords

Consumer Economics: Theory, Criteria for Decision-Making under Risk and Uncertainty

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