A Dual-Self Model of Impulse Control
Fudenberg, Drew, and
David K. Levine. 2006. "A Dual-Self Model of Impulse Control."
American Economic Review,
We propose that a simple ?dual-self? model gives a unified explanation for several
empirical regularities, including the apparent time inconsistency that has motivated
models of quasi-hyperbolic discounting and Rabin?s paradox of risk aversion in the
large and small. The model also implies that self-control costs imply excess delay,
as in the O?Donoghue and Rabin models of quasi-hyperbolic utility, and it explains
experimental evidence that increased cognitive load makes temptations harder to
resist. The base version of our model is consistent with the Gul-Pesendorfer axioms,
but we argue that these axioms must be relaxed to account for the effect of cognitive
load. (JEL D11, D81)
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Levine, David K.