Temptation and Revealed Preference

Gul and Pesendorfer [9] model the static behavior of an agent who ranks menus prior to the experience of temptation. This paper models the dynamic behavior of an agent whose ranking of menus itself is subject to temptation. The representation for the agent’s dynamically inconsistent choice behavior views him as possessing a dynamically consistent view of what choices he “should”make (a normative preference) and being tempted by menus that contain tempting alternatives. Foundations for the model require a departure from Gul and Pesendorfer’s idea that temptation creates a preference for commitment. Instead, it is hypothesized that distancing an agent from the consequences of his choices separates normative preference and temptation. Dept of Economics, Boston University, 270 Bay State Road, Boston MA 02215. Email: [email protected]. I am greatly indebted to Larry Epstein for his guidance and encouragement throughout the project, and to Bart Lipman for many useful discussions. I have also bene…tted from comments from Paulo Barelli, Faruk Gul, Klaus Nehring, Wolfgang Pesendorfer, Gábor Virág, seminar participants at Rochester, Princeton, Yale, Iowa and Boston University, participants at the Canadian Economic Theory Conference (May 2004), the Risk, Uncertainty and Decisions Conference (June 2004), and the Midwest Economic Theory Meeting (Nov 2004), and in particular from Eddie Dekel (the Editor) and referees. The usual disclaimer applies.