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A Dual-Self Model of Impulse Control

Drew Fudenberg and David K. Levine
The American Economic Review
Vol. 96, No. 5 (Dec., 2006), pp. 1449-1476
Stable URL: http://www.jstor.org/stable/30034982
Page Count: 28
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A Dual-Self Model of Impulse Control
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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 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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