Self-control in peer groups

People with a self-control problem often seek relief through social interactions rather than binding commitments. Thus, in self-help groups like Alcoholic Anonymous, Narcotics Anonymous etc., members are said to achieve better personal outcomes by mainly sharing their experiences. In other settings, however, peer influences can severely aggravate individual tendencies towards immediate gratification, as is often the case with interactions among schoolmates or neighborhood youths. Bringing together the issues of self-control and peer effects, we study how observing the behavior of others affects individuals’ ability to resist their own impulses towards short-run gratification. In particular, these purely informational spillovers tend to make agents’ choices of self-restraint or self-indulgence mutually reinforcing. We thus identify conditions on initial self-confidence, confidence in others, and degree of correlation that lead to either a unique “good news” equilibrium where social interactions improve selfdiscipline, a unique “bad news equilibrium” where they damage it, or the coexistence of both. We conduct a welfare analysis of group membership and show that individuals will generally find social interactions useful for self-control only if they have at least a minimal level of confidence in both their own and their peers’ ability to resist temptation. At the same time, having a partner who is “too perfect” is no better than being alone, since one learns nothing from his actions. The ideal partner is shown to be someone with a slightly worse self-control problem, as this makes his successes more encouraging, and his failures less discouraging. Our paper thus provides a psychologically grounded theory of endogenous peer effects, as well as of the importance of group morale.