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Timing and Self‐Control
Author(s) -
Fudenberg Drew,
Levine David K.
Publication year - 2012
Publication title -
econometrica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 16.7
H-Index - 199
eISSN - 1468-0262
pISSN - 0012-9682
DOI - 10.3982/ecta9655
Subject(s) - control (management) , self control , computer science , economics , econometrics , psychology , artificial intelligence , social psychology
The standard dual‐self model of self‐control, with a shorter‐run self who cares only about the current period, is excessively sensitive to the timing of decisions and to the interpolation of additional “no‐action” time periods in between the dates when decisions are made. We show that when the shorter‐run self is not completely myopic, this excess sensitivity goes away. To accommodate the combination of short time periods and convex costs of self‐control, we introduce a cognitive resource variable that tracks how the control cost depends on the self‐control that has been used in the recent past. We consider models with both linear and convex control costs, illustrating the theory through a series of examples. We examine when opportunities to consume will be avoided or delayed, and we consider the way in which the marginal interest declines with delay.