Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/35650 
Year of Publication: 
2009
Series/Report no.: 
IZA Discussion Papers No. 4049
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
Self-administered rewards are ubiquitous. They serve as incentives for personal accomplishments and are widely recommended as tools for overcoming self-control problems. However, it seems puzzling why self-rewards can work: the prospect of a reward has a motivating force only if the threat of self-denial of the reward after low performance is credible. We explain how a rational forward-looking individual may achieve commitment to self-rewards, by applying Köszegi and Rabin's (2006) model of endogenous reference point formation to a self-regulation problem. Our results show why and when self-regulation built on self-rewards can be successful and thus illustrate the power, but also the limits, of self-rewards.
Subjects: 
Self-control
motivation
self-reinforcement
time inconsistency
reference-dependent preferences
JEL: 
A12
C70
D86
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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