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A Dual-Self Model of Impulse Control
Author(s) -
Drew Fudenberg,
David K. Levine
Publication year - 2006
Publication title -
american economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 16.936
H-Index - 297
eISSN - 1944-7981
pISSN - 0002-8282
DOI - 10.1257/aer.96.5.1449
Subject(s) - axiom , hyperbolic discounting , economics , dual (grammatical number) , mathematical economics , discounting , impulse (physics) , simple (philosophy) , base (topology) , cognition , econometrics , dynamic inconsistency , mathematics , psychology , physics , art , mathematical analysis , philosophy , geometry , literature , finance , epistemology , quantum mechanics , neuroscience
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 Rabin’s paradox of risk aversion in the large and small. The model also implies that self-control costs imply excess delay, as in the O'Donoghue 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.

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