Temptation-Driven Preferences

Temptation–Driven Preferences

“My own behavior baffles me. For I find myself not doing what I really want to do but doing what I really loathe.” Saint Paul What behavior can be explained using the hypothesis that the agent faces temptation but is otherwise a “standard rational agent”? In earlier work, Gul and Pesendorfer [2001] use a set betweenness axiom to restrict the set of preferences considered by Dekel, Lipman, and R...

Review of Economic Studies , Ltd . Temptation - Driven Preferences

Temptation–Driven Preferences1

“My own behavior baffles me. For I find myself not doing what I really want to do but doing what I really loathe.” Saint Paul Gul–Pesendorfer [2001] give a decision–theoretic model of temptation building on a framework of Dekel, Lipman, and Rustichini [2001]. We argue that the axiom they use to identify temptation, set betweenness, rules out plausible and interesting forms of temptation. We pro...

Life-cycle Models, Economic Puzzles and Temptation Preferences

This paper focuses on the difficulty of standard life-cycle models to predict the behavior observed in the reality, most noticeably the excess sensitivity of consumption to income, the under-provision for old-age consumption, the limited participation in the financial market, and the lack of asset decumulation after retirement. It shows that allowing for preference reversals, as it is the case ...

Temptation 1

This survey discusses decision–theoretic models of agents who seek to constrain and regulate their own future behavior. The common theme is that the decision makers’ future utility is affected by unwanted temptations. The wish to eliminate temptations from future option sets creates a preference for commitment. The surveyed models explore the relationship between temptations and other psycholog...