Econometrica: May 2012, Volume 80, Issue 3

Costly Self‐Control and Random Self‐Indulgence

https://doi.org/10.3982/ECTA9280
p. 1271-1302

Eddie Dekel, Barton L. Lipman

We study the model, a version of the Strotz (1955) model with uncertainty about the nature of the temptation that will strike. We show that the random Strotz representation is unique and characterize a comparative notion of “more temptation averse.” Also, we demonstrate an unexpected connection between the random Strotz model and a generalization of the Gul–Pesendorfer (GP) (2001) model of temptation which allows for the temptation to be uncertain and which we call random GP. In particular, a preference over menus has a random GP representation if and only if it also has a representation via a random Strotz model with sufficiently smooth uncertainty about the intensity of temptation. We also show that choices of menus combined with choices from menus can distinguish the random GP and random Strotz models.

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Supplemental Material

Supplement to "Costly Self Control and Random Self Indulgence"

This appendix contains an omitted proof referenced in the paper.

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