IDEAS home Printed from https://ideas.repec.org/a/eee/ecolet/v145y2016icp186-191.html
   My bibliography  Save this article

Models of limited self-control: Comparison and implications for bargaining

Author

Listed:
  • Lu, Shih En

Abstract

This paper compares two models of limited intertemporal self-control: the linear-cost version of Fudenberg and Levine’s dual-self model (2006) and the quasi-hyperbolic discounting model. The main distinction between the two frameworks can be formulated as whether agents care about future self-control costs: dual selves do, while quasi-hyperbolic discounters do not. The dual-self model is applied to a bargaining game with alternating proposals where players negotiate over an infinite stream of payoffs, and it is shown that, in subgame-perfect equilibrium, the first proposer’s payoff is unique and agreement is immediate. By contrast, Lu (2016) shows that with quasi-hyperbolic discounters, a multiplicity of payoffs and delay can arise in equilibrium.

Suggested Citation

  • Lu, Shih En, 2016. "Models of limited self-control: Comparison and implications for bargaining," Economics Letters, Elsevier, vol. 145(C), pages 186-191.
    • Handle: RePEc:eee:ecolet:v:145:y:2016:i:c:p:186-191
    DOI: 10.1016/j.econlet.2016.06.012
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0165176516302166
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.econlet.2016.06.012?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January.
    2. Faruk Gul & Wolfgang Pesendorfer, 2005. "The Revealed Preference Theory of Changing Tastes," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 72(2), pages 429-448.
    3. José Luis Montiel Olea & Tomasz Strzalecki, 2014. "Axiomatization and Measurement of Quasi-Hyperbolic Discounting," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(3), pages 1449-1499.
    4. Xue, Licun, 2008. "The bargaining within," Economics Letters, Elsevier, vol. 101(2), pages 145-147, November.
    5. Matthew Rabin & Ted O'Donoghue, 1999. "Doing It Now or Later," American Economic Review, American Economic Association, vol. 89(1), pages 103-124, March.
    6. David K. Levine & Drew Fudenberg, 2006. "A Dual-Self Model of Impulse Control," American Economic Review, American Economic Association, vol. 96(5), pages 1449-1476, December.
    7. Isabelle Brocas & Juan D. Carrillo, 2008. "The Brain as a Hierarchical Organization," American Economic Review, American Economic Association, vol. 98(4), pages 1312-1346, September.
    8. Thaler, Richard H & Shefrin, H M, 1981. "An Economic Theory of Self-Control," Journal of Political Economy, University of Chicago Press, vol. 89(2), pages 392-406, April.
    9. Faruk Gul & Wolfgang Pesendorfer, 2001. "Temptation and Self-Control," Econometrica, Econometric Society, vol. 69(6), pages 1403-1435, November.
    10. David Laibson & Andrea Repetto & Jeremy Tobacman, 2005. "Estimating Discount Functions with Consumption Choices over the Lifecycle," Levine's Bibliography 784828000000000643, UCLA Department of Economics.
    11. Shane Frederick & George Loewenstein & Ted O'Donoghue, 2002. "Time Discounting and Time Preference: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 351-401, June.
    12. Benabou, Roland & Pycia, Marek, 2002. "Dynamic inconsistency and self-control: a planner-doer interpretation," Economics Letters, Elsevier, vol. 77(3), pages 419-424, November.
    13. David Laibson, 1997. "Golden Eggs and Hyperbolic Discounting," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(2), pages 443-478.
    14. B. Douglas Bernheim & Antonio Rangel, 2004. "Addiction and Cue-Triggered Decision Processes," American Economic Review, American Economic Association, vol. 94(5), pages 1558-1590, December.
    15. Shaked, Avner & Sutton, John, 1984. "Involuntary Unemployment as a Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 52(6), pages 1351-1364, November.
    16. Lu, Shih En, 2016. "Self-control and bargaining," Journal of Economic Theory, Elsevier, vol. 165(C), pages 390-413.
    17. Loewenstein, George & O'Donoghue, Ted, 2004. "Animal Spirits: Affective and Deliberative Processes in Economic Behavior," Working Papers 04-14, Cornell University, Center for Analytic Economics.
    18. E. S. Phelps & R. A. Pollak, 1968. "On Second-Best National Saving and Game-Equilibrium Growth," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 35(2), pages 185-199.
    19. Benhabib, Jess & Bisin, Alberto, 2005. "Modeling internal commitment mechanisms and self-control: A neuroeconomics approach to consumption-saving decisions," Games and Economic Behavior, Elsevier, vol. 52(2), pages 460-492, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Manuel A. Utset, 2023. "Time-Inconsistent Bargaining and Cross-Commitments," Games, MDPI, vol. 14(3), pages 1-21, April.
    2. Yixuan Shi, 2022. "Dynamic Volunteer's Dilemma with Procrastinators," Working Papers tax-mpg-rps-2022-17, Max Planck Institute for Tax Law and Public Finance.
    3. Lu, Shih En, 2016. "Self-control and bargaining," Journal of Economic Theory, Elsevier, vol. 165(C), pages 390-413.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. George Ainslie, 2012. "Pure hyperbolic discount curves predict “eyes open” self-control," Theory and Decision, Springer, vol. 73(1), pages 3-34, July.
    2. Méder, Zsombor Z. & Flesch, János & Peeters, Ronald, 2017. "Naiveté and sophistication in dynamic inconsistency," Mathematical Social Sciences, Elsevier, vol. 87(C), pages 40-54.
    3. Brocas, Isabelle & Carrillo, Juan D., 2021. "Value computation and modulation: A neuroeconomic theory of self-control as constrained optimization," Journal of Economic Theory, Elsevier, vol. 198(C).
    4. Isabelle Brocas & Juan D. Carrillo, 2008. "The Brain as a Hierarchical Organization," American Economic Review, American Economic Association, vol. 98(4), pages 1312-1346, September.
    5. Emre Ozdenoren & Stephen W. Salant & Dan Silverman, 2012. "Willpower And The Optimal Control Of Visceral Urges," Journal of the European Economic Association, European Economic Association, vol. 10(2), pages 342-368, April.
    6. Lu, Shih En, 2016. "Self-control and bargaining," Journal of Economic Theory, Elsevier, vol. 165(C), pages 390-413.
    7. Stefano DellaVigna, 2009. "Psychology and Economics: Evidence from the Field," Journal of Economic Literature, American Economic Association, vol. 47(2), pages 315-372, June.
    8. Stephan Meier & Charles Sprenger, 2010. "Present-Biased Preferences and Credit Card Borrowing," American Economic Journal: Applied Economics, American Economic Association, vol. 2(1), pages 193-210, January.
    9. Ryota Nakamura & Marc Suhrcke & Daniel John Zizzo, 2017. "A triple test for behavioral economics models and public health policy," Theory and Decision, Springer, vol. 83(4), pages 513-533, December.
    10. Marco Casari, 2009. "Pre-commitment and flexibility in a time decision experiment," Journal of Risk and Uncertainty, Springer, vol. 38(2), pages 117-141, April.
    11. Sebastian Schweighofer-Kodritsch, 2015. "Time Preferences and Bargaining," STICERD - Theoretical Economics Paper Series /2015/568, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    12. Klaus Nehring, 2006. "Self-Control through Second-Order Preferences," Levine's Bibliography 321307000000000391, UCLA Department of Economics.
    13. David Jiménez-Gómez, 2018. "The Evolution of Self-Control in the Brain," Working Papers. Serie AD 2018-04, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    14. Khwaja, Ahmed & Silverman, Dan & Sloan, Frank, 2007. "Time preference, time discounting, and smoking decisions," Journal of Health Economics, Elsevier, vol. 26(5), pages 927-949, September.
    15. Mannberg, Andréa, 2012. "Risk and rationalization—The role of affect and cognitive dissonance for sexual risk taking," European Economic Review, Elsevier, vol. 56(6), pages 1325-1337.
    16. Balbus, Łukasz & Reffett, Kevin & Woźny, Łukasz, 2022. "Time-consistent equilibria in dynamic models with recursive payoffs and behavioral discounting," Journal of Economic Theory, Elsevier, vol. 204(C).
    17. Lucks, Konstantin, 2016. "The Impact of Self-Control on Investment Decisions," MPRA Paper 73099, University Library of Munich, Germany.
    18. S. Nageeb Ali, 2011. "Learning Self-Control," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 126(2), pages 857-893.
    19. Incekara-Hafalir, Elif & Linardi, Sera, 2017. "Awareness of low self-control: Theory and evidence from a homeless shelter," Journal of Economic Psychology, Elsevier, vol. 61(C), pages 39-54.
    20. Minwook Kang, 2019. "Pareto-improving tax policies under hyperbolic discounting," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 26(3), pages 618-660, June.

    More about this item

    Keywords

    Self-control; Bargaining; Time inconsistency; Dual self; Quasi-hyperbolic discounting;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecolet:v:145:y:2016:i:c:p:186-191. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ecolet .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.