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

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  • 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
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    References listed on IDEAS

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    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.

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    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

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