Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/217090 
Year of Publication: 
2020
Citation: 
[Journal:] Theoretical Economics [ISSN:] 1555-7561 [Volume:] 15 [Issue:] 1 [Publisher:] The Econometric Society [Place:] New Haven, CT [Year:] 2020 [Pages:] 279-317
Publisher: 
The Econometric Society, New Haven, CT
Abstract: 
This paper provides a behavioral foundation for the willpower as limited cognitive resource model which bridges the standard utility maximization and the Strotz models. Using the agent's ex ante preferences and ex post choices, we derive a representation that captures key behavioral traits of willpower constrained decision making. We use the model to study the pricing problem of a profit-maximizing monopolist who faces consumers with limited willpower. We show that the optimal contract often consists of three alternatives and the consumer's choices reflect a form of the "compromise effect" which is induced endogenously.
Subjects: 
Willpower
compromise effect
self control
temptation
contracting
JEL: 
D4
D9
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc Logo
Document Type: 
Article

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.