Document Type

Article

Publication Date

2012

Abstract

We study a dynamic model of self-control where the history of one’s decisions (understood as emotions) has in‡uence on subsequent decision making. We propose that effort and regret are emotions produced by previous decisions to either resist or yield to temptation, respectively. When recalled, these emotions affect an individual'’s preferences, in turn affecting self-control decision at a particular point in time. Our model provides a uni…ed explanation for several empirical regularities puzzling economists and cognitive scientists. We explain non-stationary consumption paths characterized by compensatory indulgence and restraint cycles, why the amplitude of consumption cycles increases with foresight and decreases with emotional mem- ory, and, …nally, we show how unavoidable options that might show up on one’s menu in‡uence choices, consequent emotions, consumption paths, and preferences for commitment.

Comments

Working Paper 12-20

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