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Commitment to Self-Rewards

Author

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  • Koch, Alexander K.

    (Aarhus University)

  • Nafziger, Julia

    (Aarhus University)

Abstract

Self-administered rewards are ubiquitous. They serve as incentives for personal accomplish¬ments and are widely recommended as tools for overcoming self-control problems. However, it seems puzzling why self-rewards can work: the prospect of a reward has a motivating force only if the threat of self-denial of the reward after low performance is credible. We explain how a rational forward-looking individual may achieve commitment to self-rewards, by applying Köszegi and Rabin's (2006) model of endogenous reference point formation to a self-regulation problem. Our results show why and when self-regulation built on self-rewards can be successful and thus illustrate the power, but also the limits, of self-rewards.

Suggested Citation

  • Koch, Alexander K. & Nafziger, Julia, 2009. "Commitment to Self-Rewards," IZA Discussion Papers 4049, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp4049
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    Cited by:

    1. Koch, Alexander K. & Nafziger, Julia & Suvorov, Anton & van de Ven, Jeroen, 2014. "Self-rewards and personal motivation," European Economic Review, Elsevier, vol. 68(C), pages 151-167.
    2. Johannes Abeler & Armin Falk & Lorenz Goette & David Huffman, 2011. "Reference Points and Effort Provision," American Economic Review, American Economic Association, vol. 101(2), pages 470-492, April.

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    More about this item

    Keywords

    time inconsistency; self-reinforcement; reference-dependent preferences; self-control; motivation;
    All these keywords.

    JEL classification:

    • A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law

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